Act Now on Tax Reform and Save Thousands

I have a friend who’s a tax attorney. He loves to chat. Whether by phone, email, Skype or smoke signals, he’s usually good for three to four calls a week.

I haven’t heard from him since late November.

I called his office in the first week of January to see how he was. His secretary said he was at a tax planning conference.

I tried again last week. Same thing. Another meeting of tax lawyers.

I finally texted him that I had a lead on an urgent tax opinion request. That got me a return call.

The opinion request was mine. He’s on the case.

You see, since the beginning of this year, it seems like all I’ve done is study the Tax Cuts and Jobs Act, the new law governing our tax code.

There’s a good reason for my urgency… you’re losing money every day of 2018 that goes by that you don’t find out about and act on the new opportunities and threats on the tax front.

If you act now, you stand to save potentially thousands of dollars in federal tax this year. The sooner you act, the more you’ll save.

Here are the top things to watch out for…

Tax Savings for Pass-Through Entities

Pass-throughs are business entities that pay no tax… they “pass-through” their profit or loss to their owners for tax purposes. They include limited liability companies (LLCs), partnerships and S corporations.

Starting on January 1, many owners of pass-throughs will pay no federal income tax on 20% of the profit from their businesses. That’s right, zip, nada. For many people, this could mean a big drop in their effective federal income tax rate.

The rules for this giveaway to pass-through owners are straightforward for people whose taxable income is well into the low six figures. After that, they get more complicated.

No matter how you slice it, however, the new tax law creates opportunities for huge tax savings.

  • Action item: If you’re a lawyer, doctor or other professional in private practice, seek tax advice immediately to see how splitting your business into parts could save tens of thousands on your tax bill.
  • Action item: If you’re self-employed or operate through an LLC or small partnership, cut your personal salary to the bone immediately. That increases your business’s “profit”… the amount from which you can deduct 20% tax free.
  • Action item: Even if you’re employed, consult a tax attorney to see if you’d be better off becoming a consultant. For many, many people, the answer is going to be yes.
  • Bonus tip: Owners of shares in real estate investment trusts (REITs) or publicly traded partnerships (PTPs) pay no tax on 20% of their qualified REIT dividends and PTP income.

Elimination of Key Deductions

The professed goal of the tax bill passed in late December was to reduce tax rates and simplify the tax code. The first was partially achieved – until cuts expire in 2025, at least – but the second didn’t happen. Instead, legislators included a few scattershot attempts at “simplification” that could cost you dearly if you don’t prepare for them.

First, when the press began to refer to the “elimination of SALT” late last year, I thought the Trump administration was going to abandon the Cold War-era nuclear arms treaties between the U.S. and Russia. The truth was better, but for many of us, not by much.

Starting this year, you can only deduct a maximum of $10,000 of state and local income and property taxes (SALT) from your federal taxes. For most people that won’t matter because the standard deduction for joint filers has been doubled to $24,000. But for many people -and not just in high-tax states like New York and California – this will mean an effective increase in federal tax.

Legislators in an increasing number of states are considering ways to get around this, however. You know those inside sections of your local newspaper that cover state legislative issues? Time to start reading them.

Second, the new law eliminates all “miscellaneous” deductions… including those for home office expenses. If you’re an employee who works remotely at your employer’s request, or if you run a small business from home, kiss the deduction for business use of your home bye-bye. In my case, for example, that’s a significant tax increase.

Action item: Find out if your state legislators and city councilors are considering steps to convert income and property taxes into forms that could be deducted from federal income tax. Let ’em know what you think!

Action item: If you work from home, model the tax implications of the loss of the home business-used deduction. You may able to rearrange things to compensate, at least partially.

Bonus tip: Deductions for unreimbursed job expenses, job-search costs, tax preparation fees, home appraisal fees, casualty and theft losses, gambling losses, many investment fees and expenses and losses on IRAs may have been eliminated, depending on upcoming IRS rulings.

Get Ready to Cut Taxes on Your Retirement Income

If you’re not yet retired, and earning the right amount of annual income, I have two action items for you:

  1. If you don’t have one already, open a Roth IRA.
  2. Create a C corporation with your Roth IRA as sole shareholder.

Who Needs a Horse Racing Betting System?

Using a horse racing betting system is for thrill and adventure lovers, all those who bet at the horses somehow wish that they had magic with them that would help them know which horse is going to win, this would help them earn tons of money as well as enjoy a thrilling game. Horse racing betting systems might not be magic but nevertheless, these can help you speculate which horse is most likely to win.

This is the reason why these systems are such a hit in the betting industry today. There are more than a few horse racing betting system, each follows a particular set of rules so that it becomes easier to deduce which horse is most likely to win at the races. These horse racing betting systems guide you regarding the deductions and selections of a particular horse on which you would lay your bet. This is interesting as well as quite informative.

But who creates them? Horse racing betting systems have not been created by some new comer trying to make it big in the betting game . These have been thought about and created by veterans in the game of horse racing after a careful study of almost each race. This is the reason why these horse racing betting systems are so successful in the market.

Almost each horse racing betting system has been based on some or the other statistics. Whereas some racing system might use a sports newspaper as basis for calculations to be done, some other racing systems might require you to study regarding the background of each of the horse. Arrival at a decision through deduction is yet another method used to create a horse racing betting system. There are also categories of different horses, where some are seasoned and in prime form some other might be a new introduction therefore most likely to commit a mistake.

Some of the common advices given by most of the experts to all those who enjoy betting is that it is most advisable not to put all the money on one horse. It is much wiser putting money on more than one horse.

Another golden rule to be followed by each betting amateur or a professional is that money used for horse racing should be the one kept aside for racing purposes only, never ever stake more than you can afford to lose.

Next time we will abakyze a successful horse racing betting system, to show you a consistent pattern you might find interesting..

Filing Online Income Tax Return

Are you thinking about filing an online income tax return? If so, then here’s a quick preview of what to expect.

You’ll be asked a series of questions

These questions are divided into three main groups. The first set of questions will be asking you about your income tax filing status. You’ll be asked for your name, address, birth date, social security number, marital status, spouse, dependents and your occupation.

The next step in the process of filing an online income tax return will be to answer a set of questions about the income you earned. If you have income from more than one source, you’ll be glad to know there’s an easy method of entering your other income sources.

Here’s list of income sources you’ll be asked about: Wages, salary, W-2 form, 1099 form, investments, interest, dividends, stocks, mutual funds, contracts, capital gains, business income, social security, IRA, tax refunds, government payments, rental property, partnerships and other income such as gambling winnings.

Once you’re done with the income section of your online tax return you’ll move on to the deductions and credits section. This is where you get to minimize your taxes. I’ll just cover the basic categories here, but their are over 350 tax deductions and credits that may be available to you.

Here are the main deduction and credit categories: Your home, you and your family, cars and other things you own, education, charitable donations, medical, taxes paid, retirement, investments, employment expenses, other tax deductions and credits.

Once you have entered all of your tax return filing information, calculations will automatically be made to figure your tax refund or tax you owe. Filing your online income tax return is the next step and then you’re done. Just follow the prompts you’ll be given for filing your tax return online and you should have your tax refund back in no time.

Taxes on Your Gambling Winnings – You Owe Uncle Sam a Piece No Matter How Much You Won

When you’re gambling at a casino, you may win a few bucks here and there and leave with more dollars than you brought with you. It may be as little as $20, or as much as $1,000. When cashing out you were never presented you with a form to declare your winnings to the IRS. If you think you’re home free, think again. As a U.S. citizen, you owe Uncle Sam a piece of the action regardless of the amount. Many players think that just because they were not given a tax form there’re home free. Not so.

So, what does get reported to the IRS? Larger amounts that are won at gambling establishments such as casinos, lottery retailers, horse race tracks and off-track betting parlors. They will issue a form W-2G, one copy to you and one to the IRS. Here are some details:

Machine Games

$1,200 or more won at a slot machine, video poker, video keno, video blackjack, etc. This only applies to a single jackpot payout amount. Accumulated credits are credit meter wins and do not count.

$1,200 or more won at a live bingo game will also trigger a W-2G, and $1,500 or more at a live keno game (minus your wager amounts).

The casino will not withhold any gambling taxes from awards in the $1,200 to $1,500 range provided you present a valid photo ID and social security number. If you do not provide this information, 28% will be withheld.

Live Table Games

Winnings from live table games are not reportable on a W-2G, except if there is a very large prize amount offered for a small wager, such as a dollar bet for a shot at a progressive table jackpot, where the winning odds are over 300/1 and the win is more than $600. For example, Caribbean Stud offers a huge progressive jackpot for wagering only $1, if you’re lucky enough to hit a Royal Flush.

If you win $600 or more in any other wagering game, such as horse, dog racing or sports betting, and the amount is at least 300 times your bet minus your wager amount, the establishment will gift you with a W-2G. If your winnings exceed $5,000 and the amount is more than 300 times your bet, 25% will be withheld. The same withholding percentage also applies to any cash prize of $5,000 or more in poker or other card tournaments minus the buy-in amount.

Winnings on state lottery games such as lotto, numbers, scratch-offs, etc. can be collected at your local retailer up to $600. Any more and you’ll have to visit the main lottery office in your community, where a W-2G also awaits you. This information is from the New York lottery. Other states may have different rules.

Winnings on Daily Fantasy Sports (DFS) contests at this time are considered games of skill. DFS sites will issue a 1099-MISC, not a W-2G for winnings of $600 or more.

Video Lottery Terminals (VLT)

$600 or more in winnings from any class II ​Video Lottery Terminal game will also invite a W-2G. This includes any winnings on machines at jurisdictions that are operated by a state lottery. For example, New York State has nine race tracks with VLT’s that are pseudo slot and video poker machines.

Deductions

The good news in all of this is that gambling losses are tax deductible but only up to the amount of your winnings, and only if you itemize deductions on your tax return.

The IRS wants to make sure that you indeed lost what you claim you lost, so a record of all your losses is required. Win- loss statements are available from most major casinos at the end of the year, provided you used your player’s club card when playing machines. Save those losing scratch-off tickets, Lotto, Powerball, and Mega-Millions tickets, daily numbers, Quick Draw, OTB, etc.

For losses on Daily Fantasy Sports contests, the IRS position at this time is unclear. Because of the skill factor, your winnings are in the hobby category. Therefore, any losses would not be deductible, although this situation could change at any time.

You don’t have to record the tickets on your tax statement, but they may be necessary if you are audited. All the IRS wants to know is the type of wager, the amount of the bet and the date of the transaction.

Always play it safe and check with your tax preparer for your personal needs.