TN 84 (11-00)
SI 00830.525 Gambling Winnings, Lottery Winnings and Other Prizes
Social Security Act as amended, Section 1612(a)(2)(C); 20 CFR 416.1121(f)
Gambling winnings, lottery winnings and prizes are generally things won in a game of chance, lottery or contest.
1. Gambling Winnings, Lottery Winnings and Prizes As Income
Gambling winnings, lottery winnings and prizes are unearned income subject to the general rules pertaining to income and income exclusions.
NOTE: We do not subtract gambling losses from gambling winnings in determining an individual's countable income.
2. Choice Between Cash and In-Kind Item
If an individual is offered a choice between an in-kind item and cash, the cash offered is counted as unearned income. This is true even if the individual chooses the in-kind item and regardless of the value, if any, of the in-kind item.
1. IRS Alerts
If developing an IRS alert for gambling winnings, lottery winnings or other prizes, see procedure in SI 02310.048, IRS Alert Development.
2. Claimant or Representative Payee Reports
If a claimant or a representative payee alleges receipt of gambling winnings, lottery winnings or other prizes, use documentation in the individual's possession to verify the income. If the individual does not have sufficient documentation to verify the income, then do the following:
Obtain the individual's statement either signed or recorded on a DROC regarding:
b. Tolerance for Valuing
Accept an individual's statement either signed or recorded on a DROC an estimate of the value of the item (or actual value, if cash) unless you have reason to doubt the estimate. If you doubt the estimate, determine the item's current market value with an independent source. (See SI 00835.020 for the definition of current market value.)
c. Apply Appropriate Rules
Determine the nature of the item and apply the appropriate operating instructions pertaining to income and income exclusions (see SI 00830.525C.).
3. Other Reports
If developing other reports for gambling winnings, lottery winnings or other prizes, see guidance for How to Act on Reports at SI 02301.010.