Do I Have to Tell the Unemployment Office I Hit the Jackpot at a Casino?

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All states offer unemployment benefits, usually funded by employers that pay mandatory unemployment insurance fees. Each state determines the rules and eligibility criteria for their program, and no two states have exactly the same set up. That means that the answer to any question a worker has will depend on the state they are working in. This is also true when it comes to reporting income like a lottery or casino win.

TL;DR (Too Long; Didn't Read)

Many states require someone applying for, or getting, UI benefits to report incoming money like lottery or casino winnings. Most states count this as unearned income that would not impact eligibility to receive benefits.

State Unemployment Programs

Each state designs its own laws about who is eligible for unemployment benefits. Most states intend the benefits to assist employees who are temporarily between jobs, out of work due to no fault of their own and actively seeking new employment. Many also have certain earnings requirements, a specified period of time the employee must have worked in the recent past, or a specified income minimum they must have earned.

A worker applies for these benefits by filing a claim form with the agency managing unemployment benefits in their state. This is often easiest done online, although phone and paper claims are possible in some states. After being approved for benefits, a worker must claim benefits or certify their eligibility regularly, usually every two weeks. In this step, the worker must affirm, under penalty of perjury, any income they earned during that period. If their income exceeds the threshold, they may not receive benefits for that period.

Reporting Different Income Types

All states look at a claimant's income when they are assessing eligibility for benefit amounts. Out-of-work employees can usually earn a small amount of money from part-time jobs without losing their UI entitlement. But too much earned income will disqualify them. On the other hand, unearned income like Social Security retirement benefits, for example, or disability benefits, usually do not count to reduce unemployment benefits.

Earned income includes any money an individual receives for performing some kind of work, including anything from physical labor to intellectual labor to selling shares on the stock market. Unearned income includes money an individual gets without having to perform any work, such as disability claims, workers' compensation, supplemental security income and pension payments.

Gambling Income Earned or Unearned

Gambling winnings are considered earned income for tax purposes, but most states do not consider it earned income for UI purposes. Note that states set their own rules for what constitutes earned or unearned income for UI purposes, so it pays to check. In most states, money earned while gambling, particularly legal gambling like at casinos, is not considered earned income for unemployment benefit purposes.

Income Tax Reporting Requirements

The rules for reporting income vary among the states. Some states require that a worker claiming UI benefits report all income they receive. This includes self-employment, part-time, full-time, earned and unearned income. That is not to say that all of these would disqualify the worker from UI benefits, but the state unemployment insurance agency will evaluate it and determine if the income received will affect the benefits the worker is seeking or receiving.

A worker who does not report income that their state requires to be reported can be charged with UI fraud and their unemployment benefits may be cancelled. Anyone winning at the casino or in other gambling endeavors should take the time to review their state's rules on reporting income and on the definition of earned and unearned income.