The IRS classifies rodeo winnings as hobby or business income based on profit motive, record-keeping, expertise, and personal enjoyment. Prize size is not a factor. Social Security recipients under full retirement age earning $50,000 in net rodeo business profit could lose $12,760 in withheld benefits under the 2026 earnings test.
Competitors should consult a tax preparer, report expected self-employment earnings to Social Security, and track when they reach full retirement age to avoid surprises. Many financial professionals are salespeople paid on what they push, not whether you end up wealthier. A fiduciary is the opposite.
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Picture a 63-year-old who filed for Social Security last year, still fit enough to rope a calf, and spent the summer driving a truck and trailer from one weekend rodeo to the next. By fall, the buckles and check stubs added up to roughly $50,000 in prize money. He knew the winnings were taxable.
What he did not know was whether the IRS would view his summer as recreation or a business, and whether Social Security would count the resulting income as earnings. That question sounds philosophical. For Social Security purposes, it can be worth thousands of dollars.
For someone collecting benefits before full retirement age (FRA), the answer depends less on the size of the prizes than on the activity that produced them. Prize money is taxable either way. What changes is whether it counts as net self-employment earnings, and that is the hinge for Social Security's earnings test.
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