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Financial, Accounting & Tax Advice

   Ten Income Tax Benefits for Farmers

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Farming has often been viewed as the backbone of the American economy. While technology and other recent developments may have changed this thinking, farmers still enjoy a preferred status, at least as federal income taxes are concerned. For instance, there are several special tax code provisions relating to farming, most of them beneficial. At the same time, taxpayers in the agriculture field may be in line for the same tax breaks available to businesses in general.

What sort of tax provisions are we talking about? Periodically, the IRS provides insights through online postings. Here are ten items that may be of interest.

1. Depreciation deductions: Like other businesses, farmers can take advantage of enhanced writeoffs for property placed in service in 2017. Specifically, a farmer may claim a maximum expensing deduction of $510,000 under Section 179, subject to a phase-out for acquisitions above $2,030,000, plus 50% “bonus” depreciation on qualified property.

2. Crop insurance proceeds: Crop insurance may be purchased by farmers to protect against losses caused by natural disasters –such as hail, drought and floods — or lost revenue due to declines in prices of agricultural commodities. However, the proceeds generally have to be reported as income in the year they are received.

3. Sales due to weather: On a related note, if a farmer sells more livestock and poultry than would normally occur in a year because of weather-related conditions, the business gets a reprieve: It can postpone reporting the gain from sales of the additional animals due to the weather until the next year.

4. Farm income averaging: Regular income averaging has gone by the boards, but farmers may still average all or some of the current year’s farm income by allocating it to the three prior years. This may lower tax for the current year tax if current income from farming is high and taxable income from one or more of the three prior years was low.

5. Deductible farm expenses: As with other businesses, farmers may write off ordinary and necessary costs of operating a farm for profit. An “ordinary” expense is one that is common and accepted in the farming business, while a “necessary” expense must be appropriate for the business.

6. Employees and hired help: Similarly, a farmer can deduct reasonable wages paid for labor hired to perform farming operations. This includes both full-time and part-time workers. Of course, the business is responsible for withholding income and payroll taxes for its employees.

  1. Items purchased for resale: Not all farm products are home-grown. Farmers may to deduct the cost of items purchased for resale in the year the sale occurs. This includes livestock and freight charges for transporting the livestock to the farm.

8. Net operating losses: If the deductions claimed by a farming operation exceed its profits, it may report a net operating loss (NOL) for the year. The NOL can be carried back for two years and then forward for up to 20 years to offset income in other years. As a result, the farm business may be entitled to a refund from a prior year or benefit from a tax reduction in a future year.

9. Loan repayments: When a taxpayer takes out a personal loan, he or she can’t deduct interest on the subsequent loan repayments. However, if loan proceeds are used in a farming business, the taxpayer may deduct the interest paid on the loan on the farm’s tax return.

10: Fuel and road use: Finally, farmers may be able to claim a credit or refund of federal excise taxes on fuel used on a farm for farming purposes. Other taxpayers often illegally claim this off-road credit, but it’s legitimate for those in the farming industry.

 

Ken Berry

   How Will the Proposed Healthcare Reform Affect Reporting?

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Most Americans are aware that the House of Representatives recently passed the “American Health Care Act” (AHCA).  But what does this mean? First of all, the Affordable Care Act (ACA), or Obamacare, is not necessarily going away.

There is a process that the AHCA (and any House-approved bill) must first complete before becoming law.  This process includes a review and likely revisions by the Senate.  If the Senate passes a bill different from the House version, either the bill goes to Committee to address the differences or the House would have to pass the Senate’s bill. Only after these steps could an ACA replacement bill be forwarded to the President for his signature, and then to the Internal Revenue Service (IRS) for proper implementation of the law.

Most significant to note is the fact that as written, the AHCA does not eliminate the 1094 and 1095  reporting requirements implemented by the ACA. As it currently stands, businesses and issuers will still be required to report employee and individual healthcare coverage to the IRS.

The AHCA immediately eliminates the penalties associated with both the individual and employer mandates originally required by ACA.  However, replacing the individual mandate would be a new continuous coverage requirement. Issuers offering plans in the individual market will be required to assess a 30 percent penalty on policyholders who either had a gap in coverage that exceeded 63 days in the prior 12 months or who aged out of their dependent coverage (young adults up to age 26) and did not enroll in coverage during the next open enrollment period. This provision would be effective for coverage obtained during special enrollment periods for plan year 2018 and for all coverage beginning plan year 2019.

The AHCA also modifies the premium tax credit for 2018 and 2019 so that the premium tax credit can be used to purchase qualified health plans sold outside of the Exchange.  If minimum essential coverage provided to an individual consists of a qualified health plan not enrolled through an Exchange, a return must be issued that includes: a) a statement that the plan is a qualified health plan; b) the premiums paid with respect to the coverage; c) the months during which the coverage is provided to the individual; and d) the adjusted monthly premium for the applicable second lowest cost silver plan for each month for the individual.

Starting in 2020, the ACA’s Exchange subsidies will be replaced with an age-banded tax credit:

    • $2,000/year for anyone under age 30
    • $2,500/year for ages 30-39
    • $3,000/year for ages 40-49
    • $3,500/year for ages 50-59
    • $4,000/year for age 60 and over

Additional AHCA Updates Include:

  • Delays the “Cadillac Tax” until 2026. ACA’s Cadillac Tax was to begin in 2018 and impose a 40% excise tax on high-cost employer-sponsored coverage.
  • Form W-2 may include information that tracks each month an employee is eligible for a group plan.
  • The annual tax-free contribution limit on HSAs can be increased to match the maximum out-of -pocket costs on high-deductible health plans.

The bill’s next stop is the Senate, where it will be considered, or even more likely, they may draft their own version of a bill and ultimately vote. While it is certainly possible that the employer and individual mandates will be repealed, there is also the possibility of alternative scenarios where individuals must prove coverage to avoid a penalty or qualify for a credit.

   Franchise Fees: Why Do You Pay & How Much Are They?

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There are plenty of myths about franchising. A great deal of them revolve around money. I hear these two statements a lot:

“Franchise companies make most of their profits from franchise fees.”

“If it wasn’t for those franchise fees, I’d probably consider buying a franchise business.”

In this article, I’m going to teach you all about franchisee fees, including why you pay them and how franchisors make money.

What Are Franchise Fees?

They’re the cost of entry. Paying the upfront franchise fee unlocks the door to the franchisors’ proprietary business systems and more. You get the complete setup. The franchise fee is literally a license to own and operate the franchise business. That’s why you must pay it.

Franchise Fee Costs

Today’s franchise fees range from $20,000-$50,000, unless you’re considering purchasing a Master Franchise. (Master franchises involve purchasing a large geographical area and selling franchises in that area.)

The franchise fee for a Master Franchise can run $100,000 or more.

Important: Don’t confuse the franchise fee with the total upfront cost of the franchise business opportunity. The franchise you’re interested in possibly buying doesn’t cost $40,000. It costs $175,000 when you include everything you need to open for business. Always look at the total upfront investment when you’re searching for a franchise to buy.

The “Other” Franchise Fees

There are other fees associated with owning and operating a franchise business. These include marketing fees and royalties.

When you own a franchise, one of the things you’re hoping to capitalize on is the brand. Franchisors spend thousands of dollars every year to advertise their brand. As a franchisee, you’ll be asked to do your part, too, by way of a monthly marketing fee.

Franchise marketing fees are usually based on your monthly revenue.

For instance, if your average monthly revenue is $25,000, and the franchisor charges a 2% marketing fee, you’ll have to pay your franchisor $500. (That’s $6,000 annually.) That’s a lot of money.

But it’s only a lot of money if the franchisors’ marketing isn’t doing the job.

In other words, if you’re paying out $6,000 and you don’t feel-or can’t measure your return on your investment, it’s a problem. Good thing there’s is an easy way to find out if the marketing fees are worth the investment. All you have to do is ask the franchisees!

In other words, when you’re doing your research, make sure you ask the franchisees you talk to how good the marketing is-and if they feel their monthly investment is advantageous to their businesses.

Royalties

There’s another fee you’ll be paying as a franchisee. It’s a royalty.

Franchise royalties are usually collected by your franchisor on a monthly basis. Like marketing fees, these fees are based on a percentage of your revenue. But there’s one major difference; the percentages are higher.

Franchise royalties range from 4% of your revenue all the way up to 12% or more. The amount has to do with the type of franchise business.

For example, a food franchise is a high-volume business. A lot of individual items are purchased by a high-volume of customers.

It’s not unheard of for a food franchise business to exceed $1 million in revenue annually. Because of volume, the franchise royalties are usually on the lower end of the royalty scale, percentage-wise.

Specifically, if you own a food franchise doing $1.5 million annually, and your franchisor charges a 5% royalty, you’d be paying $75,000 in royalties to the franchisor every year.

In contrast, if you own a business consulting franchise, the royalty percentage may be 10%, which does sound high. But you’re probably not doing $1.5 million in revenue like you would be if you owned a food franchise. You’re probably doing $300,000. And franchisors don’t have to invest as much in a consulting franchise as they do in a food franchise.

FYI: Monthly royalties are where the profits are for franchisors-not the upfront franchise fee, which is a one-time payment.

As shown above, franchise fees are a necessary part of franchising.

Both parties benefit from franchise fees, marketing fees, and royalties if the franchisor offers a good business system, and the franchisee follows it.

   Tax Withholdings & Your W-4

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Did you get a large refund this past April? More than $1,000? Or perhaps you owed money and had to write a check you didn’t want to write? It may be time to sit down, sip your beverage, and learn a bit about how to adjust your tax withholdings.

Withholdings are the taxes your employer takes from your pay each check, and it all starts with your payroll department. It’s not too tough once you understand, and it’s better that you control your money.

There are a number of situations that would prompt you to want to review and possibly adjust your withholding:

When you experience life changes it’s time to look at how your taxes would be impacted. Marriage or divorce can change your tax situation and is a good reason to adjust your W-4. The addition of a dependent, by birth, adoption, or an elderly parent moving in and getting more than 50% of their support from you will qualify as an extra exemption. This last example is easy, and shows how one additional withholding allowance on the W-4 represents one more personal exemption on your tax return. On a side note – these life changing events should also trigger a review of your beneficiaries on any and all of your retirement accounts.

The purchase of a new home is likely to have the largest impact on your withholding. A $250,000 mortgage (at 4.5% 30yr fixed) will have just over $11,000 in tax deductible interest the first full year. Add another $4,000 for property tax. If your state income tax already put you at or near the standard deduction amount, then this $15,000 will translate to additional allowances on your W-4.

Having a side gig and a W-2 job may be reason to lower your withholding allowance for your W-2 job so you can pay in more taxes to offset taxes that are not withheld from your self-employment income.

   Main Reasons Why Restaurant Clients Must Navigate Accounting Software

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Running a restaurant presents a unique set of accounting challenges for many managers and owners. Issues such as transient staff, high transaction volume and theft are key concerns for restaurant owners, and having a robust system in place to handle these situations can go a long way. From general purpose accounting software to restaurant-specific accounting software, there are several options to choose. As technology continues to evolve and change the business environment for restaurant owners, accounting professionals have a real opportunity to be a trusted advisor with specialized knowledge.

“The accounting industry serves restaurant clients as well as it serves any other type of clients – which is to say, with varied degrees of success, depending on our area of expertise. For our clients, there is a vast difference between working with a finance team that really knows, understands and lives and breathes your industry, and one that dabbles,” said Matt Hetrick, President, Culinary Accountants, Inc.

Restaurant owners need to implement a robust accounting system that is independent from the personnel executing them and simple to use, can handle processing numerous transactions in a short time span, and will streamline processes. The food industry can be a hectic and stressful environment that oftentimes require quick decision making, and having accurate information readily available is crucial. Another characteristic of the restaurant industry is that many workers are young, not financially savvy and/or reliant on tips, which can result in errors or theft, or both.

“Restaurants deal with a high volume of individual transactions – many of which take place in a kitchen, bar, or dining room during the 2-3 hour rush each evening. Decisions need to be made on the fly, and often accounted for on the fly, after the guest is satisfied. The potential for theft in the restaurant world is quite high, comparatively, too. Staff are often tempted to exchange free (stolen) goods for higher tips, because of the tip-based compensation model,” said Hetrick.

Accounting professionals that are focused on the restaurant industry will not only be familiar with the challenges their clients face, but will also know what solutions exist to help alleviate their clients’ pain points. Available restaurant accounting software varies from simple to fully customizable. Some restaurants, like startups, may benefit from general-purpose accounting software, while others will need restaurant accounting software.

General-purpose accounting software have features such as general ledgers, profit and loss, cash flow, basic inventory and payable and receivables, but they need to be customized for the restaurant industry. Even then, reporting limitations still exist. Accounting software especially designed for restaurants will include features specific to the restaurant industry such as native POS systems, menu planning, cost accounting, inventory, payables, receivables, shift management, wage and tip management, but may have less robust accounting features. The expanded features of restaurant accounting software make it easier for owners and managers to handle shift changes and cancellations and inventory fluctuations. It will also help managers and owners manage the cost of their ingredients, while maintaining competitive pricing and tracking peak demand times for various items. General purpose accounting programs, on the other hand, have less of a learning curve and have been around for a while. What system a restaurant chooses to implement ultimately depends upon the needs of the business and the business’ financials. Regardless of the system used, accountants need to work with closely with their clients to ensure that the proper protocols and procedures are being followed.

“The accounting software you utilize is only going to be as good as the effort you put into using it. You can use either general purpose accounting programs, such as QuickBooks or Xero, or more specialized restaurant specific programs like PlateIQ, Breadcrumb/Upserve or Toast. Either approach requires a commitment to consistency, process, simplification, and feedback-utilization,” said Hetrick.

As accounting professionals help clients decide which solutions are best for them, it’s important to remember that accountants need to constantly look to the future. They should constantly pull in real-time data to assess the restaurant’s accounting needs and help clients make business decisions to ensure long-term growth and success.

“Accounting should be a constant conversation, and the challenge moving forward is to make it a meaningful conversation between experts in restaurant finance and experts in restaurant operations, using the best tools available. The tools keep evolving and improving, so we have to adapt to use them in the most meaningful and efficient ways possible,” said Hetrick.

 

by Taija Sparkman

   How to Remove Assets from a Taxable Estate

A simple and basic estate planning tool is a revocable living trust (RLT). Revocable means it can be changed; living, because you are alive; and trust which is a legal document. The point of a RLT is to protect your assets from probate, the long and drawn out process that can take sometimes a year to get the assets of a decedent to their intended heir.

A trust is made up of three parties: the grantor is the person making the trust, the trustee is the person that controls the assets, and the beneficiaries are those set to inherit the assets of the trust. An RLT WILL NOT remove assets from your taxable estate. It is just a simple way to avoid probate.

Then there is asset protection, and most business owners have done some form of it, by creating an LLC or a corporation. Asset protection planning is proactive legal action that protects your assets from future creditors, divorce, lawsuits, or judgments. This involves a series of legal and lawful techniques that can deter a lawsuit, provide settlement negotiation power, and help prevent the seizure of your assets in the event of a judgment.

Limiting liability is done through separating assets. When everything is tied to an individual’s name, all of the assets are at risk should he or she be a named defendant in a lawsuit. A slip and fall incident on a rental property can jeopardize the owner’s personal assets without legal separation through some kind of asset protection. This protection begins by separating risk and liability from one’s wealth in a financial plan. If you own rental properties, simple asset protection would be to form an LLC for each rental property. That way, if one rental property is sued, then the only asset at risk would be that one rental property.

Now let’s talk about the fun part – taxes with asset protection. First let’s discuss Grantor Retained Annuity Trusts (GRAT’s). GRAT’s simply freeze an asset and provide an annuity paid to the former owner of the asset. For instance, let’s say that you have a client that owns a business worth $2 million. It is his thought that the business will continue to go up in value. He has children that might want to take the business over in ten years. He simply forms a GRAT and places the shares of stock or units of membership into the GRAT (Note: you have to file as a Q-Sub if an S-Corporation). This freezes the asset at $2 million and pays the grantor (your client) an annuity of $200,000 a year. The only gamble that you are taking is if you die. If that happens, the asset in the GRAT goes back into your estate.

If you ultimately want to be charitable, you can form an Irrevocable Charitable Remainder Trust (CRT). You transfer an appreciated asset into an irrevocable trust. This removes the asset from your estate so no estate taxes will be due on it when you die. You also receive an immediate charitable income tax deduction for the value of the asset(s).

The trustee then sells the asset at full market value, paying no capital gains tax, and re-invests the proceeds into income-producing assets. For the rest of your life, the trust pays you an income. When you die, the remaining trust assets go to the charity(ies) you have chosen. That’s why it’s called a charitable remainder trust.

A family limited partnership (FLP) used to be one of the most valuable asset protection strategies for a family whose members wanted to preserve their assets while retaining control over them. FLP’s were set up much like traditional limited partnerships with “general partners” (frequently parents) and “limited partners” (usually the children). General partners manage the partnership’s assets, make investment decisions, share in the FLP’s income, and are responsible for the FLP’s debts. Limited partners have an ownership interest in the FLP and share in income generated by the FLP, but they have little or no control over the FLP’s activities and are responsible for the FLP’s debts, only to the extent of his or her ownership interest.[1]

I don’t subscribe to the old school FLP strategy. All 50 states now accept limited liability companies (LLC). Estates or trusts can hold a mix of assets, some with potential liabilities associated with them. For example, a trust may hold marketable securities, cash, and real estate with potential environmental or tort liabilities. The marketable securities and cash could be at risk for the liabilities associated with the real estate. However, if the estate or trust held the real estate in a single-member LLC, the other assets of the estate or trust would be insulated from liabilities because the total exposure would not exceed the value of the real estate.

If an LLC is formed by family members, and certain assets owned by the family have inherent liabilities associated with them (e.g., a service station or a factory), multiple LLC’s can be formed to isolate the family’s other assets from potential liabilities of the high-risk assets. The family members could transfer their proportionate interests into each parcel of real estate to a separate LLC in exchange for membership interests in each LLC. They would then transfer their membership interests in each real estate LLC to another LLC, which would hold marketable securities and other assets that the family wanted to be held by an entity. This upper-tier LLC would be isolated from any liabilities associated with the real estate because the liability would be contained within each lower-tier LLC.

If the older family member transfers all the assets to an LLC and takes back all of the membership interests, he or she would not make a gift to anyone. After the creation of the LLC, the older family member would be free to make gifts of the membership interests and claim the appropriate discounts. [The Tax Court ruled favorably in Mirowski, where the decedent (shortly before her unanticipated death) formed a single member LLC and within days thereafter, made transfers of interests into the LLC to her daughters.] Care should be taken in the drafting of the LLC so that no rights lapse for the transferred or retained membership interests under IRC § 2704(a) and that the membership interests are not subject to an applicable restriction under IRC § 2704(b) or IRC § 2703. If a married couple formed the LLC, and one of the spouses provided most or all of the assets, yet they received equal membership interests, any gift on formation argument would be neutralized by the marital deduction. See sections 804 and 805 for a discussion of IRC §§ 2703 and 2704.

Intentionally Defective Grantor Trusts (IDGT’s), are probably my favorite thing to use. Estate tax planners have long employed intentionally defective grantor trusts to freeze the value of an asset for estate tax purposes, while transferring assets out of the estate, free of gift tax. An IDGT does this: it allows for a complete transfer to a trust, but it is defective for tax purposes. The trust is irrevocable, which means that it can’t be changed and is removed from the taxpayer’s taxable estate. The best part is the grantor has no perceived powers. Even though the IDGT is irrevocable and would ordinarily have to get an employer identification number (EIN) and file a return, because the grantor retains certain other powers, the trust, although irrevocable, is treated as a grantor trust for income tax purposes. As a result, the grantor, though not a beneficiary, is taxed on all the trust’s income, even though he or she is not entitled to any trust distributions. Making it defective.

As you can see, there are a number of ways to protect assets and avoid the estate tax at the same time.

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[1] John J. Pembroke & Associates LLC

By Craig W. Smalley, MST, EA On May 15, 2017

   Tips for Taxpayers Who Owe Taxes

The IRS offers a variety of payment options where taxpayers can pay immediately or arrange to pay in installments. Those who receive a bill from the IRS should not ignore it. A delay may cost more in the end. As more time passes, the more interest and penalties accumulate.

Here are some ways to make payments using IRS electronic payment options:

  • Direct Pay. Pay tax bills directly from a checking or savings account free with IRS Direct Pay. Taxpayers receive instant confirmation once they’ve made a payment. With Direct Pay, taxpayers can schedule payments up to 30 days in advance. Change or cancel a payment two business days before the scheduled payment date.
  • Credit or Debit Cards. Taxpayers can also pay their taxes by debit or credit card online, by phone or with a mobile device. A payment processor will process payments.  The IRS does not charge a fee but convenience fees apply and vary by processor.Those wishing to use a mobile devise can access the IRS2Go app to pay with either Direct Pay or debit or credit card. IRS2Go is the official mobile app of the IRS. Download IRS2Go from Google Play, the Apple App Store or the Amazon App Store.
  • Installment Agreement. Taxpayers, who are unable to pay their tax debt immediately, may be able to make monthly payments. Before applying for any payment agreement, taxpayers must file all required tax returns. Apply for an installment agreement with the Online Payment Agreement tool.Who’s eligible to apply for a monthly installment agreement online?
    • Individuals who owe $50,000 or less in combined  tax, penalties and interest and have filed all required returns
    • Businesses that owe $25,000 or less in combined tax, penalties and interest for the current year or last year’s liabilities and have filed all required returns

Those who owe taxes are reminded to pay as much as they can as soon as possible to minimize interest and penalties. Visit IRS.gov/payments for all payment options.

IRS YouTube Videos:

   Many tax-exempts Owe heir 990s Soon

The IRS is warning nonprofits and their advisors that many tax-exempt organizations have a filing deadline for 990-series information returns next Monday, May 15.

Form 990 information returns and notices are due on the 15th day of the fifth month after an organization’s tax year ends. For calendar-year organizations, May 15 is the deadline to file for 2016.

By law, organizations that fail to file annual reports for three consecutive years will see their federal tax exemptions automatically revoked as of the due date of the third year they are required to file.

Small tax-exempt organizations with average annual gross receipts of $50,000 or less may file an e-notice called a Form 990-N (e-Postcard). Tax-exempts with average annual gross receipts above $50,000 must file a 990 or 990-EZ, depending on their receipts and assets. Private foundations must file Form 990-PF.

Organizations that need additional time to file can obtain an automatic six-month extension using Form 8868. The request must be filed by the due date of the return. However, no extension is available for filing the 990-N.

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The service also noted that it generally does not ask organizations for Social Security numbers, and cautioned filers not to provide them on the 990. By law, both the IRS and most tax-exempt organizations are required to publicly disclose most parts of Form 990 filings, including schedules and attachments. The IRS also urges tax-exempts to e-file to reduce the risk of inadvertently including Social Security numbers or other unnecessary personal information.

   How Are Gambling Winnings Taxed?

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Most people don’t think about taxes on their way to the track or casino, but what might seem like nothing more than the chance to win some extra money actually carries significant tax implications. As is often the case, federal and state governments single out casino winnings for unique taxes of their own. Failure to properly report your haul may result in penalties and headaches, so be aware of these rules to stay on the safe side:

How Much You Win Matters

Gamblers are lucky in that casino taxes are not progressive like income taxes are. That is, you will owe the same percentage to the IRS on a $100,000 jackpot as a $10,000 one. Yet, it’s important to know the thresholds that require reporting. Winnings in the following amounts must be reported:

  • $600 or more at a horse track (if that is 300 times your bet)
  • $1,200 or more at a slot machine or bingo game
  • $1,500 or more in keno winnings
  • $5,000 or more in poker tournament winnings
All of these require giving the payer your Social Security number, as well as filling out IRS Form W2-G to report the full amount won. In most cases, the casino will take 25 percent off your winnings for the IRS before even paying you.
Not all gambling winnings in the amounts above are subject to IRS Form W2-G. W2-Gs are not required for winnings from table games such as blackjack, craps, baccarat, and roulette, regardless of the amount. Note that this does not mean you are exempt from paying taxes or reporting the winnings. Any and all gambling winnings must be reported to the IRS. It only means that you do not have to fill out Form W2-G for these particular table-based games.

Reporting Smaller Winnings

Even if you do not win as much as the amounts above, you are still legally obligated to report. You also need to report any awards or prize money you won during the year in question. Yes, even if you only win $10, you still technically have to report it (even if the casino didn’t). Gambling income plus your job income (and any other income) equals your total income.

Fortunately, you do not necessarily have to pay taxes on all your winnings. Instead, if you itemize, you can offset taxes owed on your winnings by reporting any losses you incurred as well. You are allowed to claim as much as the total amount won that appears on Form 1040, which would eliminate your taxable gambling income. Just be sure any deductions taken this way (in combination with other itemized deductions) are higher than the standard amount. Otherwise it would make more sense not to itemize, even if it meant foregoing your gambling loss deductions.

   Merry May Tax Moves

Welcome to the merry, merry month of May, which is particularly joyous for folks who’ve finished up their 2016 tax returns.

That’s almost 136 million of us, with around 17 million of those 1040 forms arriving at Internal Revenue Service processing centers in the final days of this year’s main filing season.

While the 2017 filing season got off to a slow start, the IRS says by the time it wrapped up on April 18, this year’s figures ended up being about the same as those in 2016.

But that doesn’t mean that it should be a lazy May for folks who filed. There are still plenty of tax moves you can make this month. Here are some key ones.

Pay yourself, not the tax man: Let’s start with an easy one. Adjust your withholding. You’ll want to do this by submitting a new W-4 to your payroll office regardless of whether you got a big tax refund this year or ended up owing Uncle Sam some money.

Ideally, you want to pay in through withholding (and estimated taxes for some of us) as close to your eventual bill as possible. That will mean you will have your money in your hands throughout the year, instead of having to wait for the U.S. Treasury to cut you a check or directly deposit the money.

For some folks this filing season, the wait was longer — and it will be that way in the future, too — thanks to a new law mandating the IRS take extra time before issuing refunds based on Earned Income Tax Credit or Additional Child Tax Credit claims. If you claim these credits, no matter how early you file the IRS can’t issue your refund before Feb. 15.

So don’t get stuck needing but not having access to your tax money next filing season. Adjust you payroll withholding now.

And if you’re afraid you’ll just spend the extra paycheck cash, set up a savings account and have the amount that was going to overpaid taxes deposited instead straight into your own savings where you can get whenever you need it.

Or if you have a 401(k) plan at work, when you adjust your withholding, also change your contribution amount to your workplace retirement plan. Shift the money that was going to the federal government in taxes to your personal nest egg. And those retirement plan contributions might help you claim the Saver’s Credit next year.

File ASAP: If you got an extension to file your 2016 return, this is a good month to take care of that. Just because you have until Oct. 16 (yes, it’s a day late this year since the 15th is on Sunday) doesn’t mean you have to keep procrastinating. The sooner you get this tax task off your plate, the more time you’ll have to do other, probably more fun, things.

Be sure to check into using Free File. It’s open for folks with adjusted gross incomes of $64,000 or less through the October extension deadline.

And if you totally missed the April 18 filing deadline, then file your now-delinquent 2016 tax return ASAP! This is the only way to stop the accruing of costly penalties and interest.

Make plans for kids’ camp: School will be ending this month across much of the United States. That means parents are scrambling to get their youngsters enrolled in day camps to fill up the coming summer days.

While the Internal Revenue Service can’t help you find the perfect camp for your kiddos, it can help cover some of the costs. Day camp expenses can be used to claim the child and dependent care tax credit.

Note, however, that overnight, sleep-away camps don’t count here, so if the tax break is important to your camp decision, that requirement should help narrow your search.

More May tax moves: These are just a few May Tax Moves to make. You can find more in the feature of the same name over in the ol’ blog’s right column.

Just scroll down a bit and look for the red lettering under the countdown clock ticking off the remaining filing extension days and hours.

I know it’s a busy month, what with transitioning from spring to full-blown summer and all the end-of-school and family vacation plans to be made. But try to take care of some tax tasks this May, too.

When you file your 2017 tax return next year, the savings from this May’s moves could make you very, very merry then, too.

tax savings

Kay Bell

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