Question about gambling and taxes

[david7147]

Massachusetts

I had a question about gambling in real casino's. My only income is SSDI, but I gamble now and then on slot machines.
If I win say 10,000 in one day in slot winnings and have 25% taken out then in federal taxes and whatever state tax rate is.
If I want can I not files a tax return for that year as long as I paid the federal and state taxes ahead of time at the casino?

Thank you

 

[Taxing Matters]

Massachusetts

I had a question about gambling in real casino's. My only income is SSDI, but I gamble now and then on slot machines.
If I win say 10,000 in one day in slot winnings and have 25% taken out then in federal taxes and whatever state tax rate is.
If I want can I not files a tax return for that year as long as I paid the federal and state taxes ahead of time at the casino?

Thank you

Winning at a casino would not typically impact your SSDI benefits unless, perhaps, you could be characterized as a professional gambler with the result that SSA might consider it substantial gainful activity (SGA).

As for taxes, you will need to file a return unless your gross income (income before deductions and credits) is below the income needed to trigger the filing requirement. For example, for the 2018 return if your filing status was single and you were under age 65 then you had to file a return if your gross income exceeded $12,000. For 2019 that increases to $12,200.

When you have income other than SSDI part of your SSDI may be included in your gross income, too. So what you'd do to determine whether you have to file a federal return is take all the lottery winnings you had (don't reduce them by the losses you had) and add in any other income you had (interest, dividends, capital gains from investments, etc) and then with that information determine how much of your SSDI is taxable and add that amount, too. IRS Publication 915 explains how to determine what part part of your SSDI benefits are taxable. The total you get is your gross income for the year. If that exceeds the threshold for the year then you must file an income tax return. The information about what amount of income you need to file a return is included in IRS Publication 501 for each year. If you must file, then you can take any deductions and credits into account in figuring your taxable income for the year. The amount of tax you pay is based on the taxable income.

If SSDI is your only source of income then I would encourage you to limit your gambling activity. Overall you are likely to lose money at the casinos — they don't stay in business by paying out lots of winnings. The odds in all the games favor the casino. And slots have the best guaranteed return for the house of any game; that's why you see so many machines on the floors of casinos. SSDI is not a huge amount of money to live on, and gambling much of that away is not a good financial practice. I understand that gambling is a form of entertainment, so I'm not saying not to go there at all. Just limit what you gamble so that you don't end up putting yourself in a financial bind. I've seen too many people over the years, especially elderly people, get into a bind because they lost too much of their money gambling.

 

[LdiJ]

I will add however, that there are circumstances where you would want to file a tax return even if your gross income is below the threshold. If you have had money withheld from gambling winnings you would get that money back if you file a tax return.