Social Security And Gambling Winnings

Are gambling winnings subject to social security tax a lot of online casino promotion categories you can use, and they all offer an advantage to you. It is possible to double your starting capital, spin the reels of your favorite machine games online for free, and even get partially refunded when you lose. Jun 15, 2012 No, only earned income is counted for Social Security purposes. Gambling winnings are only considered income if you claim the income a self-employment income.

In the spring of 2012, the jackpot for the U.S. Mega Millions lottery reached a record-breaking $640 million. If the lucky winner of this prize opted to take a lump-sum payment, he'd immediately find his winnings slashed to $462 million. Subtract another 25 percent for federal taxes, and even more for state taxes, and the jackpot easily drops to less than half of its advertised value. While lottery winners lose a large chunk of their winnings to Uncle Sam, many are surprised to learn that they aren't required to pay Social Security taxes on these winnings.

Social Security

The U.S. Social Security program provides benefits to people who are retired or disabled. The funding for this program comes from taxes collected under the Federal Insurance Contributions Act, or FICA. As of 2012, more than 159 million workers in the U.S. pay Social Security tax on their earnings, which helps to provide benefits to more than 55 million people. While 38 million of those receiving benefits are retirees, these taxes also help to pay for benefits to the disabled. Spouses, children and dependents of workers who have passed away can also receive benefits.

FICA Rates

Employers withhold 4.2 percent of an employee's income to cover Social Security tax. The employer must also pay a certain amount of Social Security tax toward each employee. If you're self-employed, you must pay the entire amount yourself -- both the employee's and the employer's portion. Social Security tax is applied to only the first $110,100 in earnings as of 2012. Because lottery winnings aren't 'earned,' they are not subject to Social Security tax.

Income Taxes on Lottery Winnings

Even though lottery winnings are not subject to Social Security taxes, they are included as ordinary income when it comes to paying federal and state income taxes. As of 2012, winners should expect to pay at least 25 percent federal tax on their lottery winnings. State taxes vary widely by location, from 10.8 percent in New Jersey to 5 percent in states like Arizona, Maine and Illinois. Some states, like California, do not collect state income tax on lottery winnings.

In the popular 1-6 Chinese poker scoring, players receive a single point for winning each row: 1 point for winning the top (or front) row, 1 point for winning the middle row, and 1 point for winning the bottom (or back) row. Chinese Poker Scoring: BonusesTo encourage players to try and make big hands, there are a number of ways to earn bonus Chinese poker points. Should a player win all three rows, that player wins three bonus Chinese poker points and is said to have “scooped.” However, if you only win two of the three rows, you win 1 point overall.In the example above, Thomas won all three rows — helped by the fact that Tony fouled his hand — and was awarded a total of 6 points. These bonus points are awarded regardless of the player winning or losing the hand.We’ll use an actual example of a hand to show how to calculate Chinese poker points.Thomas loses the top line because his jack-high is weaker than Tony’s queen-high, so he loses a point and Tony wins a point. Open faced chinese poker scoring system. Thomas then wins the middle because he has a pair of sevens to beat Tony’s ace-high.The bottom line is where things become interesting because Thomas has a higher straight and wins.

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Taxes on Lottery Winnings: Real-World Example

For an example of taxes paid on lottery winnings, consider railroad engineer Donald Lawson, who won the $337 million Powerball jackpot in August 2012. Lawson opted for the lump-sum payout, which reduced his total prize to $224.6 million before taxes. After paying federal and state taxes, Lawson was left with just $158.7 million.

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Social Security Income And Gambling Winnings

Odds of Winning the Lottery

Ssi And Casino Winnings

If the idea of paying out a huge portion of your lottery jackpot to the government leaves you seeing red, take heart; the odds that you'll ever have to pay taxes on a major lottery prize are extremely low. The odds of winning the record-breaking $640 million Mega Millions prize in 2012 were just 1 in 176 million. The odds of winning the jackpot prize in the Powerball are roughly the same. That means you're 50 times more likely to be struck by lightning, or 33 times more likely to be stung to death by bees than you are to win such a huge jackpot.

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