Today TaxMama hears from Kathy in New Mexico, a lucky lady. “I am a housewife. I have no income. My husband has a 100% disability income. I won a jackpot of $1,500.00. I have to pay taxes on this amount.
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Is this earned income?”
Dear Kathy,
How wonderful for you!
In fact, I just heard from someone else who went to a local Indian casino and won about $2,500 on New Years Day. What a great way to start the year.
You’re correct. The jackpot is considered taxable income. But, regardless of how long you worked to win it, it’s not considered ‘earned income’.
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If your husband’s disability income is taxable, and you itemize deductions, be sure to report your gaming losses on Schedule A. Use Line 28 – the losses are not subject to the usual 2% of adjusted gross income.
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So, if you play regularly, you just might not owe any taxes on those winnings at all! https://www.irs.gov/pub/irs-pdf/f1040sab.pdf
Enjoy the winnings.
And remember, you can find answers to all kinds of questions about gambling winnings and other tax issues, free. Where? Where else? At TaxMama.com
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