Tax Law (Questions About Taxes)/Gambling income and SSD


I am on Social Security Disability and during 2012 I did some gambling at a local Indian Casino. I did hit a few jackpots and received a W2G for each of them. I also received a Win/Loss report from the Casino at the end of the year.
When I filed my taxes for 2012 I had to report the W2G's as income and also reported the Winnings from the Win/Loss report. I also listed the Loss part from the report on the Sched 'A'. The report itself shows Money IN/ Money/OUT resulted in an overall Loss. I assume I filed everything correctly as far as the IRS and State are concerned.
The problem is, I received a letter from SSA recently telling me I will be paying considerably more for my Medical and Rx coverage because my 2012 MAGI indicated I had a substantial income, because it included the gambling winnings I reported. But they did not deduct the gambling Losses from the Sched 'A' which brings my income back down to show minimal winnings and reducing my MAGI to a realistic level.
How can they look at my gambling winnings as income and not consider the losses associated with the winnings? How do I fix this. I can not afford to pay almost $300 more for my Medicare and Rx coverage out of the little I get from SSD. Please Help

ANSWER: HI Sam, MAGI (modified adjusted gross income) is your income (including gambling winnings) before any itemized deductions (which includes any reported gambling losses). Unfortunately, sSince you have reported gambling winnings (inclusive of what has been reported on a W2G), there are no options to change or reduce your reported MAGI for 2012.

Best regards,

---------- FOLLOW-UP ----------

QUESTION: Thank you for responding so quickly. One more followup question please.
Does or will SSD take into consideration the losses incurred,understanding that the MAGI as recorded is pseudo income and not actual income. The Winnings are based on monies recycled back into the machine in some cases adding more to the winnings without consideration as to the money played back in to gain those winnings. For them to consider all winnings as income without acknowledging the money cycled in to win it, something is not right about that.
Thank you again
Sam Crain

Hi Sam, I'm not an expert in Social Security Disability so I would recommend contacting Social Security. However, I would assume if they are using MAGI only, then they would not take into account any losses. In other words, they are only looking at gross income amounts (and not any other potential deductions such as losses).

Best regards,

Tax Law (Questions About Taxes)

All Answers

Answers by Expert:

Ask Experts


Randall Brody, EA, MBA, CCP


Tax Samaritan is a boutique firm specializing in the preparation of taxes and the resolution of tax problems for Americans living abroad, as well as the unique tax issues that apply to taxpayers that are gamblers, teachers, nurses and military.


Get Expert U.S. Tax Preparation Wherever You Live We Built Our Company By Helping People With Their Tax And Financial Goals We can make a difference for you too! Tax Samaritan is a highly specialized boutique firm of Enrolled Agents providing tax solutions and wealth management for U.S. taxpayers with a special focus on assisting Americans living abroad. We strive to make U.S. tax preparation both accessible and easy for our clients. If you’re a U.S. citizen and live abroad, it’s likely that you still need to file a U.S. tax return and we can help make this an easy process for you. Our tax and financial services are very straightforward. We want to help solve your tax and financial issues and enhance your financial situation.

National Association of Enrolled Agents, National Association of Tax Professionals

Enrolled Agent (EA) Certified Compensation Professional (CCP) University of Phoenix: Masters of Business AdministrationCalifornia State University, East Bay: Bachelors of Science, Finance.

Past/Present Clients
We have served thousands of clients worldwide in the last 20+ years.

©2017 All rights reserved.