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.

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’.

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.

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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