Will I lose food stamps if I win a gift card, free product or the lottery?

(Last Updated On: January 1, 2019)

“Will I lose food stamps if I win?” This is a very serious question that could have a tremendous impact on your household. It’s no wonder why so many people are asking this question!

Sometimes, when you read the fine print for certain offers (like some of these discounted computers), you might see scary disclaimers that indicate you might lose food stamps if you follow through on the offer.

That’s a scary prospect! Like Bobbie wrote on our Facebook page, “That’s really a shame that you have to go hungry in order to qualify for a computer to better your education!”

Other people have wrote to us, asking if winning one of our giveaways could result in a loss or reduction of their food stamps benefits.

I don’t think it’s fair that anyone should ever have to wonder “will I lose my food stamps?” just because they have an opportunity to improve their situation. You shouldn’t have to choose between food stamps and a computer to further your education. You shouldn’t have to choose between food stamps and a gift card to buy school supplies with. When you’re living with a chronically low income, you shouldn’t have to wonder “will I lose my food stamps?” over small blessings like these.

We’ve spent a lot of time looking into food stamps law and all the amazing discounts you can get with a food stamps card… but somehow, we never looked into whether or not winning a giveaway or a gifted computer could cause you to lose food stamps.

So that’s what we’re going to analyze in this post!

Why do these agencies include these disclaimers?

Food stamps and other federal benefits are dependent on your income. That’s why a change in your income or assets could potentially change your award or eligibility. Like most legalese, many of these disclaimers are there for the organization’s legal protection and to ensure that you’re aware. As we’ll explain below, you’re probably just fine.

Will I lose food stamps if I win a free product, like a computer?

There are two things that the food stamps office considers when determining your eligibility for food stamps: income and resources.

The distinction between a resource and income is important. You may have to report your assets when you apply, undergo a review or exceed the resource limits of the program. However, the total value of your non-exempt resources affects your eligibility and not your monthly award amount.

The USDA states that households may have $2,250 in countable resources. If a household member is over age 60 or disabled, the limit is increased to $3,500. If you receive a gift card or other asset valued at $2,251 or more, or if the card you receive raises your total assets above that level, then you will need to report that.

What is a resource?

The food stamps office counts cash and easily-liquidated assets as resources. For example, they do count cash, bank balances, savings accounts, stocks, bonds, certificates of deposit (CDs) and mutual funds. They may also count real estate other than your primary residence, unless that other real estate generates an income.

They do not, however, count your home, retirement accounts, household belongings or other items that you cannot liquidate into cash. Most states exempt at least one vehicle from your asset limits, also. I have heard that jewelry may be counted as an asset because it is easy to liquidate but I have not been able to confirm this.

Ultimately, you will not lose food stamps for non-cash gifts unless it is a high-value item that places you over the asset limits. In most states, winning a free car wouldn’t matter either since your vehicle and home are usually exempt from your asset totals.

So, the short answer is no. Winning a free computer or other product will not cause you to lose food stamps unless it is a very high-value item that is easily liquidated for cash.

Will I lose food stamps if I win a gift card?

Gift cards are complicated. It depends on what type of gift card you’ve received and under what circumstances.

They are so complicated, in fact, that the USDA had to issue a clarifying memo about them in 2017. You can read the entire memo here, but here’s the short answer:

Basically, the USDA divides gift cards into three categories to determine whether or not they count as income.

Gift cards that can only be used at a certain business (such as Walmart or Amazon) are never counted as income or as a resource.

Because the card is restricted and cannot be spent as freely as cash, they don’t count it as cash. The USDA also states that “establishment-specific gift cards are usually restricted to purchasing a limited range of goods, and are analogous to household goods that have been excluded from resources.” They also state that their value is usually insufficient to affect your ability to purchase food.

Thus, these gift cards will never cause you to lose food stamps!

Credit card company gift cards (like Visa Gift Cards) are handled differently.

Gift cards from credit card companies (like Visa Gift Cards) are divided into two categories, depending on the circumstances under which they were received. If you’re wondering “will I lose my food stamps,” then you really need to pay close attention to this next part.

It all comes down to whether or not you could reasonably anticipate receiving the gift card. If yes, it counts as income. However, if not, it counts as a resource but it does not count as income.

If you receive a credit card company gift card (like a Visa Gift Card) but could not reasonably anticipate receiving it, then it counts as a resource but NOT as income.

If you could not reasonably anticipate receiving the gift card, it does not count as income. Thus, you do not have to count one-time gifts or sweepstakes winnings as income for food stamps purposes. They do, however, count as a resource or asset.

For more information on this, please refer the “will I lose food stamps if I win a product?” section above.

If you receive a credit card company gift card (like a Visa Gift Card) and could reasonably anticipate receiving it, then it counts as income. 

If you receive gift cards regularly, then they will count as income. According to the USDA memo, “credit card company gift cards that are provided regularly and can be reasonably anticipated should be counted as income.”

So, if you’re wondering “will I lose food stamps over this?” the answer is possibly. In this case, the amount will have to be verified and it will impact the amount of your monthly food stamps allotment. You should follow your state’s laws for reporting income changes.

Although the federal food stamps law establishes minimum basic requirements for all states, the states have great flexibility in how they implement the program. That’s part of the reason why you can use your EBT card for fast food in some states but not others.

You should always follow the instructions provided in your official food stamps award letter. They will clearly explain when and how you should report changes to your income.

Will I lose my food stamps if I win the lottery?

In 2011, a Michigan man who won a $2 million jackpot continued to receive and use food stamps. He netted $850,000 after taxes. Nevertheless, lottery winnings did not count if  received in one lump-sum payment.

For obvious reasons, this story went viral and there was backlash. Several states enacted laws to ensure that food stamps were given to those who actually need them most. The federal government also got involved and Congress added new restrictions in the federal Agricultural Act of 2014.

According to the Agricultural Act of 2014, “any household in which a member receives substantial lottery or gambling winnings, as determined by the Secretary, shall lose eligibility for benefits immediately upon receipt of the winnings.” The household will “remain ineligible for participation until the household meets the allowable financial resources and income eligibility requirements” under the law. Although the law does not define exactly what constitutes “substantial” winnings, other states have enacted laws that cap the winnings at $5,000.

So, the answer to the question “Will I lose my food stamps if I win the lottery?” really depends on where you live and how much you’ve won. If you win a lot of money, you may lose your benefits for a while but you can always reapply if you meet the requirements in the future.

Got another food stamps question? Ask us in the comments!

Where did we come up with the idea to write an article about “Will I lose food stamps?” One of our readers asked the question, of course!

We are always happy to help and we love to answer your questions. Got a question? Ask in the comments!

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