Gambling Winnings and Income

Rianne

Rianne

Thinks s/he gets paid by the post
Joined
Aug 2, 2017
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Location
Champaign
We started playing Bingo. A local Bingo club goes to different restaurants and offers customers free Bingo. Most people buy a drink/food and make it a night. The restaurants reimburse or pay for the Bingo services as it increases their business.
Last night, there were several prizes over $2000. A vacation, cash for $6000, a preowned certified car and a few others less than that but considerable.
We have to stay under ACA MAGI. I got a little nervous when my numbers were coming close to a win (I did not win). And with Bingo, there's no losing, so it's not like you can win a lot then lose it at a casino. How do you account for these winnings? Does the Bingo company keep track of what you won? Do you claim it?
We started this for fun, but then I thought, what if we win too much?
 
Usually a certain amount of winning will generate a 1099 for gambling winnings

"If you win any prize worth more than $600, you should receive a 1099 form for it. ... (Gambling and lottery winnings are treated differently than sweepstakes prizes, and those winners do not receive 1099 forms.)" W2-G
is also used for gambling winnings.
You can't deduct losing amounts unless you file long form which is rare anymore.
It will definitely count against ACA MAGI if included on your tax filing.
 
Yes, winning could screw your ACA subsidies since over $600 of winnings will be reported to the IRS.

However, if you are a professional gambler you would report the winnings on a Schedule C, pay self-employment tax and should be able to then make a deductible IRA contribution to offset the income.

I'm not sure what the other implication of declaring yourelf as a professional gambler might be. YMMV.
 
pb4uski said:
Yes, winning could screw your ACA subsidies since over $600 of winnings will be reported to the IRS.

However, if you are a professional gambler you would report the winnings on a Schedule C, pay self-employment tax and should be able to then make a deductible IRA contribution to offset the income.

I'm not sure what the other implication of declaring yourelf as a professional gambler might be. YMMV.
Click to expand...

You have to prove it is a business, not just a hobby. That would require some semblance of consistent gambling and some sizable investments in the business. Schedule C for gambling is a big red flag to the IRS.
 
It is highly unlikely that Rianne qualifies as a professional gambler, that applies to essentially a full-time job as a gambler (e.g., pro poker players).

Her potential winnings are more akin to sweepstakes winnings because she is not betting anything. It is still fully taxable per the IRS under the same gambling category.

BTW, the W-2G reporting requirement for bingo is $1,200. From W-2G instructions:

Box 1. The payer must furnish a Form W-2G to you if you
receive:
1. $1,200 or more in gambling winnings from bingo or slot
machines;
2. $1,500 or more in winnings (reduced by the wager) from
keno;
3. More than $5,000 in winnings (reduced by the wager or
buy-in) from a poker tournament;
4. $600 or more in gambling winnings (except winnings from
bingo, keno, slot machines, and poker tournaments) and the
payout is at least 300 times the amount of the wager; or
5. Any other gambling winnings subject to federal income
tax withholding.
Click to expand...

Anyway, I learned something new because I thought the reporting level was $5,000 from playing in poker tournaments.

EDIT - now that I think about it, I'm not convinced that the W-2G requirement even applies to free bingo.
 
Last edited:
We are past the ACA age and are on Medicare, so I have not studied the subject. But @Rianne, I have a curiosity question for you:

If you won that $6000 prize, it pushed you over that ACA hurdle and you also paid the consequent income taxes, would you have more money in your pocket after the win compared to the amount you would have had without the win? IOW do you actually go backwards?
 
USGrant1962 said:
It is highly unlikely that Rianne qualifies as a professional gambler, that applies to essentially a full-time job as a gambler (e.g., pro poker players).

Her potential winnings are more akin to sweepstakes winnings because she is not betting anything. It is still fully taxable per the IRS under the same gambling category.

BTW, the W-2G reporting requirement for bingo is $1,200. From W-2G instructions:



Anyway, I learned something new because I thought the reporting level was $5,000 from playing in poker tournaments.

EDIT - now that I think about it, I'm not convinced that the W-2G requirement even applies to free bingo.
Click to expand...

Agree that the free bingo would be a Prize winning subject to the 600 limit for reporting by the business.

Actually all winnings are taxable and we are talking about reporting limits, not taxable limits.
 
OldShooter said:
We are past the ACA age and are on Medicare, so I have not studied the subject. But @Rianne, I have a curiosity question for you:

If you won that $6000 prize, it pushed you over that ACA hurdle and you also paid the consequent income taxes, would you have more money in your pocket after the win compared to the amount you would have had without the win? IOW do you actually go backwards?
Click to expand...
We would pay $20K-$24K in healthcare premiums alone, not including deductibles. Lowest Bronze plan. We go backwards.

Also, USGrant1962 you added:
4. $600 or more in gambling winnings (except winnings from
bingo, keno, slot machines, and poker tournaments) and the
payout is at least 300 times the amount of the wager; or
How is bingo an exception?
 
Rianne said:
We would pay $20K-$24K in healthcare premiums alone, not including deductibles. Lowest Bronze plan. We go backwards. ...
Click to expand...
Wow. Yet another intelligently designed government program. (Stay away, Porky!)
 
Tell them you are playing for your favorite charity and have the info available so the 1099 will go in the name of the charity and not you. You won't get the winnings, but you also won't lose the ACA subsidies.
 
You might be able to sidestep the issue by "giving" the winning bingo card to a friend who is with you and isn't on ACA subsidies and they could then give you a gift of some of the winnings after considering their tax cost... not recommending... just saying....
 
pb4uski said:
You might be able to sidestep the issue by "giving" the winning bingo card to a friend who is with you and isn't on ACA subsidies and they could then give you a gift of some of the winnings after considering their tax cost... not recommending... just saying....
Click to expand...
Great idea. Last night there were 6 of us playing at a table, made up of family. Next time and if I win, that's my plan.
 
Wouldn't winnings be offset by losses? That would work in lowering your net take. Just lose enough to get the dollar number low enough to stay within your particular ACA needs.:cool:
 
Rianne said:
We would pay $20K-$24K in healthcare premiums alone, not including deductibles. Lowest Bronze plan. We go backwards.

Also, USGrant1962 you added:
4. $600 or more in gambling winnings (except winnings from
bingo, keno, slot machines, and poker tournaments) and the
payout is at least 300 times the amount of the wager; or
How is bingo an exception?
Click to expand...


Bingo is the exception on #4 because it is listed on #1.


1. $1,200 or more in gambling winnings from bingo or slot
machines;
 
aja8888 said:
Wouldn't winnings be offset by losses? That would work in lowering your net take. Just lose enough to get the dollar number low enough to stay within your particular ACA needs.:cool:
Click to expand...

Not exactly.......as Van Winkle explained earlier, winnings are income.
Losses are deducted as itemized deduction (only up to amount of winnings) and would only be useful if you itemize which is harder to do these days because of the larger std deduction.
 
Very few gamblers do not have enough entry fees to offset winnings. A $600 win MAY generate a 1099.
 
So if it was me and I had some concerns then I would ask the representative of the Bingo group how they report larger winnings. If they report then you have your answer. If not then it's your decision whether you want to to report or not but legally you have to report.

Then I would stop playing Bingo if it had the potential to jeopardize your ACA program.
 
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