Gambling and taxes – what should you report?

Gambling is something that many people enjoy doing either on a regular basis or now and again. Of course, gambling is a much more enjoyable pastime when you are winning rather than losing! However, if you are one of the lucky ones on a winning streak you need to bear in mind that you’re probably going to have to give a slice of your good luck to the IRS, as it will be classed as taxable income.

In many cases, if you have been lucky enough to win a big jackpot the payer will actually deduct taxes from your winning upfront and the information will be issues to you via the W-2G form. The amount of money that you have won, and the type of gambling that you won it on, will determine whether the payer gets involved in taking your details and withholding part of your winnings for the taxman.

When you have bagged larger sums of money by way of winnings the payer will need to take your social security number to let the IRS know that you have come into some additional ‘income’. In some cases they will take the 25 percent tax from your winnings before you get your money. If you do not provide your social security details the payer could withhold as large an amount as 28 % of the winnings, so it is advisable to cooperate and furnish the casino with the necessary information.

Of course, you may only have won a small amount with your gambling, which will not warrant the payer to take your details and inform the IRS. However, in order to ensure that you are paying your taxes by the book you will still need to declare these winnings. Both big jackpots and smaller winnings can be reported under the ‘other income’ section of Form 1040. You can also supply details here of any taxes that were paid upfront on your winnings through deductions made by the payer, which will be detailed on the W-2G form.

The good news is that whilst you have to pay tax on your gambling winnings you are also able to deduct tax on your losses. So, unless you struck really lucky and scored a big jackpot with your very first bet you can recoup some or even all of the money that you pay on taxes on your winnings based on how much you lost on your gambling.

Andrew writes frequently about personal finance as well as issues effecting both consumers and small businesses, covering everything from credit cards to mortgages to mortgage loans.

Little Deductions You May Miss

You need to know what deductions may be possible even when you hire someone else to do your taxes. A quick look over the tax codes on the IRS.gov website will help you determine all of the deductions you need to be considering.

Top Deductions that are Missed

1.     Expenses that are NOT reimbursable by the company. Any expenses that are incurred during the tax year and that are considered ordinary and necessary for your industry can be used as a deduction on your taxes (at least a portion).

a.     Depreciation on work computers

b.     Dues paid to professional societies

c.     Chamber of commerce membership

d.     License fees for your business or occupation

e.     Tools and supplies used in work

f.      Work related education

g.     Union dues or other related expenses

2.     Most people overlook the potential of the deducting expenses associated with working at home. The Business Use of Home deduction can be applicable when your home is your principle place of business or when the space is used EXCLUSIVELY for business purposes. A portion of home expenses can be deducted when these criteria are met. The amount deductible will be determined by the percentage of home space used for business purposes.

a.     Real estate taxes

b.     Deductible mortgage interest

c.     Utilities

d.     Insurance

e.     Repairs

3.     Mileage on a vehicle can be deducted for a number of different reasons. The amount that is allowed will be determined by the activities, but the numbers can add up to substantial savings. Be sure to keep a written record of all mileage you intend to claim on your taxes.

a.      Business mileage – keep up with the trips you take for meetings, events or supply runs. Any time that you use your vehicle for business related purposes you can add that mileage to your totals. The business mileage has the highest allotment by the IRS.

b.      Charitable mileage would be those miles you put on your vehicle when driving in the service of a charitable organization.

c.      Medical mileage would be those miles put on the vehicle when visiting the doctor, dentist or other medical specialist.

4.     Casualty, disaster and theft losses may be overlooked by many people when it comes to taxes. The amounts you can claim on your taxes are only those above any payments made by insurance companies. You will along be able to claim a portion of those totals. These loses are generally deductible for the year they occurred. Property located in a federally declared disaster area may meet different guidelines.

Knowing all that you can about the tax code will help you find even little deductions that you might be missing. A tax professional can make it easier to weed through all of the tax code. Some of the deductions seem little until you begin to add them all up. Counting a penny here and a penny there will help you save big money in the long run.

The key to making the most of your tax deductions is documentation. Keep well organized records of your actions and activities (for your business as well as your personal activities). It will be easier for you to sort through the records when they are in order. Good documentation will help you discover any of those little deductions you may have otherwise missed. The more deductions you uncover the lower you will be able to push your tax bill.

 

Nick Maddux has been in the finance industry for 3 years; he contributes to blogs that deal with insurance deductions and where to get a free credit score report.

 

Save Yourself Money by Taking Advantage of TaxACT

Save Yourself Money by Taking Advantage of TaxACT

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Saving yourself the unnecessary fees other companies charged would not be worth the investment if the service you receive is not the best … Read more at 2009 Tax.

Save Yourself Money by Taking Advantage of TaxACT

TaxACT is a great tax service that you should take advantage of. It does not require any download or purchase, simply sign in and answer some questions to have your taxes done for you. Not only will this save you the $30-$100 most tax companies will charge you, but TaxACT also uses the best up to date programs to ensure that you will get the largest refund possible.

Saving yourself the unnecessary fees other companies charged would not be worth the investment if the service you receive is not the best you can possibly receive. TaxACT uses up to date software that will get you all of the latest exploits available with the newest rules. There are also many different programs that will guide you to the biggest return as you are answering the questions in the simple interview used to gather important tax information. TaxACT has a special Examiner series handling Income, Deductions, and Credits, savings and loan calculators, and alerts that let you know if you have overlooked any potential savings. Even complex tax returns are comprehensively and accurately handled through TaxACT’s detail oriented and automated programs. This is all to ensure that no detail is overlooked and no potential money is lost in your rebate.

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