Sung-yoon Nah, an 83-year-old L.A. resident, lives off of government-funded support. One of his hobbies is gambling at a local casino with friends. He currently collects slightly over $900 a month via Supplemental Security Income (SSI) and Social Security (SSA) programs.
At times, Nah has won $30 to $50 from gambling, but he loses money more often than not. However, he hit a $5,300 jackpot on a slot machine 10 days ago.
Nah was excited about winning the money, but was soon conflicted. He had no idea how tax was calculated and if it affected his welfare program.
To jump into conclusion, Nah does not owe taxes, but it is highly likely that he will not be eligible to receive the SSI.
“For taxes, it is right for the gambler to report to the IRS about the income that allowed him to gamble over $1,200 worth of money,” certified public accountant Andy Lee said.
“But those who earn less than $25,000 a year are exempt from reporting their taxes. For Nah, even adding the money he has won from gambling doesn’t put him over the limit. The SSA funds don’t have to be reported, so he doesn’t owe taxes. The second issue here is the welfare. The SSI is provided by the government in addition to the SSA, which may not be enough to support one’s living. The regulation for the SSA is relatively strict and any increase in base income must be reported to the Social Security Administration. Increased income includes wages from employers, grants and even money won from gambling or lottery. Even free food or drinks must be reported. If the income increases to a point at which the SSA is no longer needed for the concerned individual, the Social Security Administration could either reduce or stop the funding accordingly. If Nah reports his $5,300 jackpot, his SSA could be cut for a few months.”
Nah is now wondering if he could keep his winning money at the casino, so that he could go there regularly and gamble with the money that he has already won. Nah’s thinking is that doing so could allow him to compartmentalize his reports to the IRS.
“That is possibly, but that must be reported to the SSI, which means that the SSI funding could be stopped,” said an expert. “Not reporting the money he won from gambling to the SSI could come back as a fine or it could at least lead to stalling his financial benefits.”
By Byongil Kim