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Tax Tips
Tax Tips
If you have self-employed income from a schedule C or you were issued a form 1099, you should strongly consider making a SEP contribution rather than and IRA contribution. A SEP contribution (Simplified Employee Pension) is fully tax deductible and can usually be larger in amount than an IRA. Further, the SEP gives you other options an IRA doesn't.
You may qualify to file form 2106 if you have expenses for your job or business that are unreimbursed. Many taxpayers have this and don't even realize it. This is an itemized deduction.
If you are self-employed or have self-employed income, you may be eligible to deduct part of your health insurance premiums directly against your income. This could be a big tax saver
If you receive a 1099 in one year for money you physically receive in the following year, you do not have to pick it up until that following year. You should be sure to note this properly on your return.
Gambling Winnings and Losses Your summer vacation may mean a trip to the casino or the racetrack. What will you owe Uncle Sam if Lady Luck happens to be on your side? Gambling winnings are fully taxable and must be reported on your tax return. You must file Form 1040 and include all of your winnings. Gambling income includes, among other things, winnings from lotteries, raffles, horse races, and casinos.
It includes cash winnings and also the fair market value of prizes such as cars and trips. Anyone who pays your winnings or awards you a prize is required to issue you a Form W-2G if your winnings are subject to Federal income tax withholding or if your winnings are over a certain amount. However, all gambling winnings must be reported regardless of whether any portion is subject to withholding.
In addition, you may be required to pay an estimated tax on your gambling winnings. If your luck isnít always so good, you may deduct gambling losses. Losses may be deducted only if you itemize deductions and only if you also have gambling winnings. Claim your gambling losses as a miscellaneous deduction on Form 1040, Schedule A. But remember, the losses you deduct may not be more than the gambling income you report on your return.
Even though you may be on vacation, if you want to deduct losses when you file your return next spring, it is important to keep an accurate diary or similar record of your gambling winnings and losses right now. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show both your winnings and losses.
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