9

I have a chronic, debilitating disease (MS). Barring a miracle cure, I am going to be on Social Security Disability the rest of my life. I’m 47, divorced, no children.

I have a hobby that I enjoy and that I’m very good at still, as long as I don’t have to face any deadlines. That hobby is cooking, and I spend most of my awake time here on SE at Seasoned Advice. Recently, I entered a contest. It’s a recipe contest, and, well, it’s a darn good entry. I have a chance at this thing. The grand prize is $25,000. (I’ll know in a week!) Two $1000 prizes are also being awarded.

So, what if??

Ok, I’ll have to pay income tax. That much I can probably figure out on my own and it’s not a big deal.

These numbers are close enough for this conversation. Pretend they’re accurate:

I receive $1000 per month SSDI.

I receive $150 per month from the State of Alaska - Adult Public Assistance.

This is my biggest concern: My rent is $1000/month, I pay $450, HUD pays $550 through a Section 8 HUD voucher.

What happens if I suddenly make $25,000?

All I really want is to buy a very used car, pay a year’s worth of car insurance, and pay off my credit cards (maybe $3000). I’d be happy to give a chunk to charity.

So, what should I do in the unlikely (but possible) event that I win? Should I sign the check over to charity before I even deposit it?

1
  • 1
    It's a catch 22.. mainly for people trying to get out of section 8 / disability. A lot of times there will be job opportunities come up or money come your way but taking it would put you in a worse spot financially - to the point where you wouldn't be able to survive.. so you (people) end up on assistance programs and never try to leave. Not saying that's your case, but that seems to be very typical and shows that the system while helpful, also holds people back at times. – user20318 Sep 15 '14 at 4:27
6

Your SSDI benefits may become taxable (partially, at last). Let's follow the IRS rule of thumb detailed here:

  1. 50% of the SS benefit: $6000.
  2. Additional income: $25000 winning + 1800 from the government assistance.

total: $32800. Since you mentioned you're single and no children, your baseline is $25000 (which is exactly the amount of the prize, but we'll do the full thing anyway). So, some of your (otherwise untaxed) SSDI benefits may become taxable.

Note that with the additional income you have almost double the poverty level, while without it you're below the poverty level (~$14K).

So let's look at the Alaska Adult Public Assistance - they demand that your resources do not exceed $2000 and have monthly income limitations. Your current income ($1000 from SSDI) is within the limit, but with $25000 prize they may consider you exceeding the limit for the period (I'm guessing a year?), or exceeding the resources limit (whatever that means). You may lose the $150 stipend for some time, better check with them.

As to HUD assistance - hard to tell, you'll need to ask them. I have experience with Sec. 8 tenants as a landlord, and IMHO they take into consideration your overall financial situation. One-time income may affect the amount of the next voucher, but I wouldn't expect them to drop you altogether.

1
  • 1
    You might be able to put it into a trust with a payout that is less than what would trigger ssdi but you should talk to a lawyer first. Their might be some pro bono locally who can check for you. – RoboKaren Sep 24 '16 at 21:28

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.