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Ss/medicare

If you were filing gambling income on schedule A and deductions of gambling losses on schedule B and you actually have a net profit then your total income will be higher. Your social security income will probably not be affected because you're gambling income will be fairly small and it takes a large amount of extra income to make your so security income taxable or to reduce the total amount of social security that you're going to get.

However, the amount of gambling income you file on schedule A increases your adjusted gross income, and Medicare costs are based on adjusted gross income not net income.

Since I had a large amount of W-2Gs that hugely increased my adjusted gross income, regardless of whether I was in that winner or loser, which would have hugely increased our Medicare costs, I filed as a schedule C business. Anyone considering this may want to consult the book written by Jean Scotton gambling and taxes or a professional tax advisor. The IRS expects businesses to make a profit and at least two out of five years and has other regulations regarding a schedule C business.

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Everyone who is gambling and getting W-2 Gs should, in my opinion, be keeping a gambling diary on a daily basis with their wins and losses. This is especially true of course if you are filing as a business. But anyone with W-2s should do this in case of an audit.

An added point (maybe a bit nit-picky) that may make a difference for some people. A person's Medicare premium is based upon their MAGI (Modified Adjusted Gross Income), not AGI. In a lot of cases the difference is minimal, but not in all cases.

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The difference between Modified Adjusted Gross Income and the usual AGI is tax exempt interest. So if you have a million dollars in muni bond interest you will not pay any federal income tax, but you will pay an extra $230.80 per month for Medicare Part B. I don't think there is any easy loophole for wealthy individuals to avoid the extra Medicare premiums.

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