Five Tax Tips for Gambling Income and Losses

Report any gambling winnings as income on your tax return. Be sure you itemize to deduct gambling losses up to the amount of your winnings. If you are a casual gambler, these tax tips can help:

Gambling income.  Income from gambling includes winnings from the lottery, horse racing and casinos. It also includes cash and non-cash prizes. You must report the fair market value of non-cash prizes like cars and trips.

Payer tax form.  If you win, the payer may give you a Form W-2G, Certain Gambling Winnings. The payer also sends a copy of the W-2G to the IRS. The payer must issue the form based on the type of gambling, the amount you win and other factors. You’ll also get a form W-2G if the payer must withhold income tax from what you win.

How to report winnings.  You normally report your winnings for the year on your tax return as “Other Income.” You must report all your gambling winnings as income. This is true even if you don’t get a Form W-2G.

How to deduct losses.  You can deduct your gambling losses on Schedule A, Itemized Deductions. The total you can deduct, however, is limited to the amount of the gambling income you report on your return.

Keep gambling receipts.  Keep records of your wins and losses. This means keeping items such as a gambling log or diary, receipts, statements or tickets.

Courtesy of IRS

For more information contact Neikrik. Mahoney and Smith at 502-896-2999

Home Energy Tax Credits Save You Money at Tax Time

Certain energy-efficient home improvements can cut your energy bills and save you money at tax time.
Residential Energy Efficient Property Credit

This tax credit is 30 percent of the cost of alternative energy equipment installed on or in your home.
Qualified equipment includes solar hot water heaters, solar electric equipment, wind turbines and fuel cell property.
Qualified wind turbine and fuel cell property must be placed into service by Dec. 31, 2016. Hot water heaters and solar electric equipment must be placed in to service by Dec. 31, 2021.
The tax credit for qualified fuel cell property is limited to $500 for each one-half kilowatt of capacity. The amount for other qualified expenditures does not have a limit. If your credit is more than the tax you owe, you can carry forward the unused portion of this credit to next year’s tax return.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

New Procedure for Retirement Plan Rollovers

The Internal Revenue Service today provided a self-certification procedure designed to help recipients of retirement plan distributions who inadvertently miss the 60-day time limit for properly rolling these amounts into another retirement plan or individual retirement arrangement (IRA).

In Revenue Procedure 2016-47, posted today on IRS.gov, the IRS explained how eligible taxpayers, encountering a variety of mitigating circumstances, can qualify for a waiver of the 60-day time limit and avoid possible early distribution taxes. In addition, the revenue procedure includes a sample self-certification letter that a taxpayer can use to notify the administrator or trustee of the retirement plan or IRA receiving the rollover that they qualify for the waiver.

A taxpayer who missed the time limit will now ordinarily qualify for a waiver if one or more of 11 circumstances, listed in the revenue procedure, apply to them. They include a distribution check that was misplaced and never cashed, the taxpayer’s home was severely damaged, a family member died, the taxpayer or a family member was seriously ill, the taxpayer was incarcerated or restrictions were imposed by a foreign country.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Before you hire an accountant...

Every dollar counts for business owners, so if you don't know where you stand on a monthly basis, you may not be around at the end of the year. And while using do-it-yourself accounting software can help monitor costs, the benefits of hiring good accountants extend far beyond crunching numbers.

Before you hire one though, make sure you understand the four basic areas of expertise in a general accounting practice:

Business advisory services. Since an accountant should be knowledgeable about your business environment, your tax situation and your financial statements, it makes sense to ask them to pull all the pieces together and help you come up with a business plan and personal financial plan.

Accounting and record-keeping. These are perhaps the most basic of accounting disciplines. While it makes sense for many business owners to manage their day-to-day records, an accountant can help set up bookkeeping and accounting systems and show you how to use them. A good system allows you to evaluate profitability and modify prices.

Tax advice. Accountants that provide assistance with tax-related issues usually can do so in two areas: tax compliance and tax planning.

Auditing. These services are most commonly required by banks as a condition of a loan. There are many levels of auditing, ranging from simply preparing financial statements to an actual audit.

The best way to find a good accountant is to get a referral from your attorney, your banker or a business colleague. You can also check in with the Society of Certified Public Accountants in your state, which can make a referral.

Courtesy of Entrepreneur

For more information contact Neikrik, Mahoney and Smith at 502-896-2999

Divorce and your taxes

If you are divorcing or recently divorced, taxes may be the last thing on your mind. However, these events can have a big impact on your wallet. Alimony and a name or address change are just a few items you may need to consider. Here are some key tax areas to keep in mind.

Child Support.
Alimony Paid.
Alimony Received.
Spousal IRA.
Name Changes.
Special Marketplace Enrollment Period.
Changes in Circumstances.
Shared Policy Allocation.

For more information contact Neikrik, Mahoney and Smith at 502-896-2999

Courtesy of IRS

3 ways to help reduce next years tax bill.

By far, the best way to lower your taxes is to save more for your retirement. Not only do you get a lower tax bill now, you're also creating your own financial security in the process.

Saving money in tax-deferred retirement accounts such as a traditional IRA or 401(k) can reduce your taxable income by quite a bit. You could qualify for up to $5,500 in tax-deferred contributions to a traditional IRA for the 2016 tax year, and an additional $1,000 if you're 50 or older.

There are several tax breaks that come along with homeownership, and they can combine to save you a good chunk of money on your taxes. These include:

Mortgage interest
Mortgage insurance premiums
Property taxes
"Points" you pay to obtain a mortgage
The most widely known benefit is the mortgage interest deduction. If you itemize deductions on your tax return, you can write off the interest you pay on mortgage debt on a first and second home, on up to $1 million in original mortgage balances. In addition to the interest, you can also include any mortgage insurance premiums you're required to pay.

Another great way to save on your taxes is to contribute to causes near and dear to you. The IRS lets itemizers deduct donations to qualified non-profit organizations and charities, including cash donations as well as property.

Keep in mind you'll need to be able to document your donations, and the documentation requirements are stricter for higher-valued donations. For example, a simple receipt with the charity's name is just fine for property valued at less than $250. However, if you donate say, a car or boat worth more than $5,000, a professional appraisal is required.

These three things can trim thousands of dollars off your tax bill, but the benefits don't stop there. By aggressively saving and investing for retirement, you can help ensure your own financial security later in life. Buying a home can lock in your housing payment, while all of your rent-paying friends watch theirs increase every year. And finally, charitable giving can benefit organizations and people in need in infinite possible ways.

Courtesy of USAToday

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

New Sharing Economy Resource Center

The Internal Revenue Service this week launched a new web page designed to help taxpayers involved in the sharing economy quickly locate the resources they need to help them meet their tax obligations.
The sharing economy typically describes situations where the Internet is used to connect suppliers willing to provide services or use of assets — apartments for rent, cars for transportation services, etc. — to consumers. These platforms are also used to connect workers and businesses for short-term work.
To help people meet their tax reporting responsibilities, the new Sharing Economy Resource Center offers tips and resources on a variety of topics ranging from filing requirements and making quarterly estimated tax payments to self-employment taxes and special rules for reporting vacation home rentals. In addition, tax-preparation software can be a helpful resource in this area, and a trusted tax professional may assist with many issues.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999