do I need to file?

[Phxman75]

Hi. The only income that I have that shouldn't be considered as income is from social security disability insurance which is around $22,000 I made for this past year. Also, during this past year I won sweepstake money on two social gambling sites called Lucky Land Slots and Chumba online slots. Between the both of them, I made around $7000 this past year. Both sites told me they do not send tax forms to the IRS or to myself regarding my winnings.  Do I necessarily have to file this year? If I do have to file, how do I go about filing without tax forms involved? Would it be on other income on the 1040 is where I would put the amount made from from both sites? 

If I do have to file I do have another thing to mention that will lead to a question later on in this paragraph. Both Chamba and Lucky Land Slots would give $1.00 of free sweep coins daily to gamble on their slots. I can obtain additional free sweep coins only by buying what is called gold coins (play money) that come in a variety of purchase options depending on the quantity. Can purchasing something else to enter to get more sweepstakes be used as deductions?

This is the first time I have ever dealt with anything regarding sweepstakes. If a tax professional can please write back to me about how I go about doing all this I would appreciate it. 

[JulieS]

No, you are not required to file based on that amount of income. 

Your disability is not taxable unless you have a significant amount of taxable income in addition to your disability income. For 2021 that number is $12,550.

If you did have a tax liability based on your gambling income, you could deduct you expenses against it

[Phxman75]

Ok, but even with me winning $7,000 worth of sweepstakes does the sweepstakes income by itself have to be filed to IRS? Because I read online that it doesn't matter what the amount is in regard to sweepstakes that were won as they still need to be reported.  None of my individual winnings leading up to $7,000 did not have tax taken out!

[GeorgeM777]

You may need to pay taxes on your Social Security Disability Insurance benefits. This can happen if you receive other income that places you above a certain threshold.  You indicated that you won $7,000 in essentially prize money and therefore, you might have to file a return.  The first step in deciding whether you need to file a return is to review the IRS guidance on when social security disability income may become taxable.

The IRS states that your Social Security Disability Insurance benefits may become taxable when one-half of your benefits, (in your case one-half of your social security disability benefits equals approximately $11,000) plus all other income, (such as your prize money of $7,000) exceeds an income threshold based on your tax filing status:

• Single, head of household, qualifying widow(er), and married filing separately taxpayers: $25,000
• Married filing jointly: $32,000
• Married filing separately but lived with your spouse during the tax year: $0

Based on the above information, if your filing status is single or married filing jointly, it does not appear that your social security disability income would be taxable.  However, if your filing status was married filing separately, and you lived with your spouse during the tax year, then it appears that your social security disability income would be taxable.

Regarding the prize money of $7,000, your standard deduction for your filing status would likely negate any tax liability because the standard deductions are all greater than the $7,000 you won.   

One way to confirm whether you have a tax liability for 2021 is to begin the process of preparing a return in TurboTax Online.  When you enter your prize money amount, you might be prompted to upgrade to a different TurboTax product; however, you won't have to pay until the very end of the process.  When you get to the end of preparing your return, and before you need to pay, you will know whether you owe any tax on your return.  Moreover, you will also know whether you are entitled to a refund.  At that point you can decide whether you wish to continue, pay, and e-file your return, or to close your account without paying and without filing.   

Here is a link to a TurboTax article discussing when social security disability income is taxable.

Is Social Security Disability Income Taxable