If gambling is your actual profession, then your gambling income is generally considered regular earned income and is taxed at your normal effective income tax rate. As a self-employed individual, you will need to report your income and expenses on Schedule C, which the eFile app will automatically generate and add to your 2020 Tax Return based on the information you enter. According to the IRS, all gambling winnings are considered income, therefore all gambling winnings are taxable and must be claimed, under the same rules and limitations as any other income. For Federal EIC, gambling winnings (while taxable) are not considered earned income. However, EIC is also calculated based on AGI, and you get the lesser of the two. You are allowed an OK credit equal to 5% of the earned income credit allowed on your Federal return. The following rules apply to casual gamblers who aren't in the trade or business of gambling. Gambling winnings are fully taxable and you must report the income on your tax return. Gambling income includes but isn't limited to winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and the fair market value of prizes, such as cars and trips. Thus gambling winnings should be considered in the same income section of the 1040 form and the losses up to the amount of the winnings would be indicated on the second line. The gambling winnings would then be determined by subtracting losses from winnings. Gambling and lottery winnings income may be determined by taking total winnings and subtracting the total costs of wagers. Costs The cost of wagers during a tax year including amounts paid for lottery tickets, bingo games or cards, raffle tickets, slot machines card allotments, etc. may be deducted from total winnings received during the same tax year. To answer your question. Yes, it's earned income. If you report it as gambling winnings your take will be taxed at 50%. The legal definition of what constitutes taxable income is incredibly broad. Gambling winnings are subject to withholding for federal income tax at a rate of 24% as of 2020 if you win more than $5,000 from sweepstakes, wagering pools, lotteries, or other wagering transactions, or anytime the winnings are at least 300 times the amount wagered. Discovering you have a winning lottery ticket is thrilling, especially if you hit the big jackpot. However, you won’t be able to keep the entire amount. Under federal law, lottery winnings are taxable, just like the income you earn at your job. You must report all gambling winnings on your federal tax return, and many “If one half of your Social Security benefits plus all other gross income – including gambling winnings – exceeds $25,000 if single or $32,000 if married and filing jointly, then a portion
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