Do Gambling Winnings Affect Your Social Security Benefits
Yes the amount of the lottery winnings will affect how much of your social security benefits will become taxable income on your 1040 income tax return. Do your SSDI benefits stop if you have. Do lottery winnings affect Social Security benefits? Mar 11, 2018 When it comes to lottery winnings and SSDI benefits, the amount you win should have no effect on your benefit payments.
- Social Security Disability Gambling Winnings
- Do Gambling Winnings Affect Your Social Security Benefits Taxed
- Do Gambling Winnings Affect Your Social Security Benefits Security
- Do Gambling Winnings Affect Your Social Security Benefits Social Security
No, lottery winnings do not affect your social security disability benefits (SSDI). But it can reduce or totally cut your Supplemental Security Income (SSI).
- The windfall elimination provision can't reduce your Social Security benefits by more than half of the amount of your pension from the job at which your earnings weren't subject to Social Security.
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That’s becauseSSDI is an earned benefit. You got it because you paid social security taxes and have proven that you are disabled.SSI, on the other hand, is a needs-based benefit. It’s paid to disabled individuals who have limited income and resources, and haven’t paid enough social security taxes.
As such, non-work related earnings like lottery winnings do not count as income under SSDI. While an SSI recipient’s financial capacity will obviously be improved if they win the lottery. This means they are not anymore in need of aid from the government.
If you’re receiving SSI, your benefits may stop temporarily. But it can resume again once your resources have fallen below the SSA’s income limit.
What Counts as Income Under SSDI?
SSDI benefits are given on the assumption that your disability prevents you from working. If you get back to work and are earning more than the SSA’s limit, you are considered to be engaged in aSubstantial Gainful Activity (SGA). When this happens, your SSDI benefits will stop.
This is why if you’re receiving SSDI benefits, the SSA won’t care about your unearned assets. It only takes into account income earned from working which includes:
- wages
- honorarium
- earnings from self-employment
- workers compensation
- other government benefits
- pensions from private insurance providers
Unearned income such as gambling winnings, dividends, interests, and spousal income is not counted as SSDI income.
How Is SSI Income Calculated?
For SSI purposes, the SSA defines income as:
anything you receive during a calendar month and can use to meet your needs for food or shelter. It may be in cash or in kind.
This explains why lottery winnings are considered income if you are receiving SSI. You can use it to buy food, pay for rent, and any other necessities.
But not all earnings count as income under SSI. The SSA only takes into account the “countable income”. This is the leftover earnings after weeding out non-income items and applying theappropriate exclusions.
How About Your Retirement Benefits?
Just like SSDI, social security retirement benefits are earned benefits. As such, winning the lottery will have no impact on your retirement benefits.
Should I Report My Winnings?
Social Security Disability Gambling Winnings
Yes, you should. It doesn’t matter if you’re receiving SSI, SSDI, or retirement benefits.
Lottery winnings are reported to the IRS and, in turn, will be seen by the SSA. If you do not report and explain the source of this income, it might get you into trouble with the SSA. Worse, they may count it as part of your earnings for the month.
If you’re receiving SSI, then that’s all the more reason to report your lottery winnings. When the IRS informs the SSA of your lottery earnings, you may get charged with overpayment. As such, you will have to return all the SSI payments you received during the time you are not eligible for SSI.
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Do Gambling Winnings Affect Your Social Security Benefits Taxed
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About The Author
Judy Ponio is a writer for Victor Malca Law P.A. and enjoys helping people with questions about social security, workers compensation, and other serious matters involving people’s livelihood. She is not an attorney and her writing should not be considered legal advice.
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If you are getting SSDI - Social Security Disability Insurance benefits (and not SSI), then no, you do not have to report the winnings to Social Security. SSI is need based and requires that sort of notice. SSDI is based on what you earned and the taxes you paid, so it is a benefit you are entitled to regardless of any money you inherit or win at a lottery.
You may owe taxes on the winnings, but that is a tax question. I suggest you tal to a tax preparer about that issue.
Best of luck to you.
Do Gambling Winnings Affect Your Social Security Benefits Social Security
The exact answers to questions like this require more information than presented. The answer(s) provided should be considered general information. The information provided by this is general advice, and is not legal advice. Viewing this information is not intended to create, and does not constitute, an attorney-client relationship. It is intended to educate the reader and a more definite answer should be based on a consultation with a lawyer. You should not take any action that might affect your claim without first seeking the professional opinion of an attorney. You should consult an attorney who can can ask all the appropriate questions and give legal advice based on the exact facts of your situation. The general information provided here does not create an attorney-client relationship.