Edward A. Lyon, JD
TaxTuneup.com, Inc.
3416 Shaw Ave #5
Cincinnati OH 45208
513.321.2821
elyon@taxtuneup.com
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Gambling Losses
Gambling losses--no kidding--are actually tax deductible. Is this a great country, or what!
You can write
off gambling losses as a
Miscellaneous Itemized Deduction on
Schedule A. They're not subject to the usual 2% floor on those deductions,
and they're not subject to the phaseout for adjusted gross incomes above
$159,950.
The catch is, you can't use them
to offset ordinary income. You can use them only to offset gambling
winnings. And you can't carry them forward to another year.
The casino or racetrack issues
a pesky W-2G, reporting your winnings to the IRS, if you win $600 or more
at the track (provided your payoff is 300 times your bet) or $1,200 on a
slot machine. They'll even withhold 28% if you win more than $5,000.
Document your losses by keeping losing tickets from lotteries and the
racetrack, and records of casino play through slot machine clubs and
markers.
Sorry, losing money at the
summer church festival doesn't count as a
Charitable Gift.
Gifts
Gifts that you receive are nontaxable income. This includes gifts that you
receive from friends and family, plus gifts of merchandise you receive from
your employer (holiday turkeys and the like).
Gifts that you make may
be deductible under these rules:
-
Business gifts you make on
behalf of your trade or business are deductible, up to $25 each, as a
Business Expense on
Schedule C,
Form 1065,
or your corporate return. (Advertising specialties, such as
pens, clocks, or calendars advertising your business and costing $4 or
less don't count towards this limit.)
-
Business gifts you make on
behalf of your employer are a deductible
Employee Business
Expense subject to the 2% floor on
Miscellaneous
Itemized
Deductions.
-
Charitable Gifts are
deductible up to 50% of your adjusted gross income as charitable
contributions of Schedule A.
Personal gifts don't affect
your income tax or your recipient's. However, they can be a great tool for
cutting tax on your estate. You can give up to $12,000 per year to as many
recipients as you choose. You and your spouse can make "split gifts" of
$24,000 per year to as many recipients as you choose. (If you give more
than $12,000 out of common funds, you'll need to file
Form 706 to report
it, but you won't owe any tax on gifts within the $24,000 split gift
limit.) If you give more than $12,000 to a single beneficiary ($24,000 for
split gifts), you'll reduce your gift/estate tax unified credit
($2,000,000 for 2008), and you'll begin owing tax on taxable gifts over
that threshold.
There are two general
exceptions to the $12,000 annual exclusions:
-
You can give an unlimited
amount to any recipient for education or health care costs if you make the
payment directly to the educational institution or health care provider.
This lets you pay a child or grandchild's entire college tuition directly
to their school without running afoul of the $12,000 limit.
-
You can contribute up to
$60,000 in a single year to a child's
Section 529 Plan so long as
you make no further gifts during the next four years.
Gold
(See Commodities)
Golf Club
Dues (See Country Club
Dues)
Group Term Life Insurance
Group-term life insurance
coverage you receive from your employer is nontaxable up to $50,000 of
coverage. If your employer or employers provide more than $50,000 of
coverage, you'll owe tax on the excess figured according to "PS 58" rates
that consider both your age and the value of the coverage. There's no need
to calculate the taxable income yourself; your employer will report it on
your Form W-2.
Group term life insurance
coverage you provide yourself and your employees is a deductible
Business Expense on
Schedule C,
Form 1065,
or your corporate return.
Guardianship Expenses
Expenses you pay in connection with your responsibilities as guardian of a
minor are a deductible
Miscellaneous Itemized
Deduction subject to the 2% floor.
Gum Treatments
Deductible Medical
Expense subject to the 7.5% floor.
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