Category Archives for "Tax Strategies"

Your gambling winnings in 2013 are taxable in 2013

Gambling Winnings in 2013

Money you win in any gambling operation in the USA is taxable. Your gambling winnings in 2013 when you play bingo, blackjack, poker or a video slot machine are no different from any other kinds of income you earn. Report the correct amount on your personal IRS 1040 income tax return.  Gambling winnings are a taxable form of income subject to federal income tax withholding up to 25%. Gaming income includes any form of wagering, from dice to betting on horses in a race.  Casual gamblers are wise to follow some tips from the professional.

  • Report your winnings because, more often than not, the government will receive an income document concerning the wagering transaction. Seek professional assistance when reporting the fair market value of prizes such as cars or trips.  Your gambling winnings are typically reported on IRS Form 1040 Line 21 as “Other Income”.
  • Under some conditions, especially if you can itemize your deductions using Schedule A on your IRS 1040 personal tax return, you can offset your gambling winnings with gambling losses.  Any losses are reported separately as miscellaneous deductions and will offset your winnings. Do not report the difference between your winnings and your losses directly on IRS Form 1040 Line 21 Other Income.
  • Keep accurate records of all your gambling activity as if you were running a business.  Proper documentation includes receipts, tickets, and daily logs of activity including the times you play and the locations of both the machine and the physical location of the store or casino.   Do not depend on Cash In/ Cash Out reports issued by resorts, hotels, or casinos; substantiate the claims of gambling losses with detailed ATM withdrawals or bank records.

Backup tax withholding is calculated at 28%. You do not have to withhold income tax from wagering transactions like bingo, keno, and slot machines, if your winnings are $5,000 or less.  A casino reports your winnings on IRS Form W-2G if the total winnings are $1,200 or more from a bingo game or slot machine.  Keno winnings are reported if they are $1,500 or more.  Your winnings from a poker tournament are reported if they are more than $5,000.

Payments of wagers are made when they are actually (or constructively) paid to the winner.

You must report this form of income on your personal tax return in the year you they are made.  Consider using IRS Form 5754, Statement by Person(s) Receiving Gambling Winnings, if the recipient is not the actual winner or a member of a group of two or more people.

For further information, review IRS Publication 525, Taxable and NonTaxable Income, and IRS Publication 529, Miscellaneous Deductions, or seek professional assistance.


Other 2013 references about reporting gambling winnings and losses:

Reporting Gambling Winnings |
Feb 4, 2013 Check out line 28, “other miscellaneous deductions,” on Schedule A. That’s where you report any gambling losses. You can claim up to the total 

Taxes in the Back » Nonresident Gamblers Take a Step Closer to …
Commissioner that a nonresident gambler may calculate gambling winnings or losses on a per-session basis. To elucidate the practical significance of this holding, the court explained the tax outcomes when applying each …

Tax Topics – Topic 419 Gambling Income and Losses
Apr 1, 2013 The following rules apply to casual gamblers. Gambling winnings are fully taxable and must be reported on your tax return. Gambling income 

Pilarski: Report gambling losses, but the burden of proof is on you …
Feb 12, 2013 QUESTION: I enjoyed your question last week regarding gambling wins and taxes. I have another question regarding my tax liability on a win.

Reporting Gambling Winnings |
Feb 4, 2013 Check out line 28, “other miscellaneous deductions,” on Schedule A. That’s where you report any gambling losses. You can claim up to the total 


We’ve hit the mid-year mark…

Tax Tips mid-year 2013

Uncle Sam is coming!

An inventory helps you tax-time 2013

Chance favors the prepared mind but doesn’t help when you face your accountant for those happy end-of-year get-togethers.  The key to any tax return is documentation. Don’t wait until a day before your scheduled meeting to compile your invoices and bank statements. In the 21st century, we depend upon our computers to enhance profits and to manage our ‘lists’. Why not also consider them as an important part of our storage solution?

Keep a list of what goes in your cardboard banker’s boxes.  Many people suggest you attach it to the outside of the storage box.  We suggest you leverage your efforts. A checklist will not only remind you what to put in the box but what is inside when you stash it on some back shelf. Consider a digitized inventory list as both ‘tickler file’ (what needs to be saved) and final inventory of all stored items.  Use your computer list to tag important ‘evergreen’ material like travel and entertainment receipts along with one-time documents like big item purchase records.  Why distribute your important material across many separate boxes when you can create a digitized inventory and consolidate your physical storage in fewer boxes listed on one big spreadsheet? Consider several ‘user-defined’ columns (fields) that might provide that special bit of information without a physical search.

Benefits of a spreadsheet inventory list

You can temporarily resort items according to specific column heading (fields) to bring items to the front of the list in seconds. Use a separate column for storage date (when you put the item in the box) as well as a column for the book or post date of the item in question. Consider a separate column on your spreadsheet for special notes. Remember you can compile the inventory of many boxes into one giant list that might cover the entire year or more.  One quick temporary data sort and you can locate a cluster of items and locate them in their labelled box!

Compile an inventory of many boxes into a giant spreadsheet

Remember payroll records including time sheets, registers, and W4/W2 copies should be stored for seven years. Keep a list of current addresses of each employee relevant to the tax year. Store this information in a color-coded box separate from other filing or banker’s boxes so that they can be located quickly. Consider including IRS W9. Form 1096, and Form 1099 in this storage area depending on whether you have employees or hire subcontractors.  One benefit of using a computerized spreadsheet is creating one workbook and having separate worksheets.  Once again, consider compiling the digital information sorted across years. Wouldn’t it be nice to peak at your tax-related information on a year-to-year basis at the click of a mouse button?  If columns (fields) are carefully designed, you could sort all your payroll information by a specific employee name on demand and have an immediate inventory listing of what paperwork you have on file for that person.

Inventory your current data and plan your future

A small business owner needs to project their sales and their estimated tax payments.  Strategic use of column date (fields) and separately linked worksheets within a large workbook can help not only remind you what to store and where you store it, but simplify your ‘what if’ when you need to plan you future.  There are many free or inexpensive phone applications that download data to a comma-separated values (CSV) file; this is another name for a spreadsheet file.  Consider linking this data to a physical storage box with a single number!  Consider adding one data field with a dollar amount.  All these fancy money management software tools are nothing more than spreadsheets with pretty pictures. With a little planning, you can integrate your physical storage location with your operational data as each event occurs.  Tickler files become inventory lists and inventory lists become summarized schedules that simplify your operations, your record keeping and preparing your 2013 tax return.


2013 Alimony Tax Treatment

People involved in a divorce and alimony payments must understand the tax significance of paying or receiving alimony to properly report their income. The IRS categorizes alimony as amounts paid according to a divorce or separate maintenance legal decree. The IRS Tax Topic 452, Alimony Paid, updated May 30, 2013, describes the following conditions associated with paid alimony.

  • The payment is neither child support nor a property settlement
  • Neither spouse files a married joint income tax return
  • Payments are made in cash or its equivalent rather than property
  • A payment is received by some third party on behalf of one spouse
  • Legal decrees do not state a specific payment is not alimony
  • IRS rules defining legal separation are in effect when payments are made
  • There is no liability for payment after death


The IRS does not consider any of the following as alimony:

  • Child support
  • Noncash property settlements whether lump sum or installments
  • Voluntary payments not required by an agreement or court decree
  • Payments considered part of community property income
  • Use of or payments for maintenance of a payer’s property


The payer of alimony deducts the payment from their reported income on their tax return; the recipient of alimony adds alimony payments as taxable income. In the event, a court decree orders both alimony and child support, the amount of alimony paid out is the balance of payment after child support has been paid in full.

It is not necessary to use a Schedule A, Itemized Deductions to adjust income when paying alimony. The adjustment to income must be entered on IRS Form 1040 or Form 1040NR, Schedule NEC. Make certain you provide the Social Security number of the recipient of the payments. Failure to properly report this information is subject to a $50 penalty. You cannot file IRS Form 1040EZ, Form 1040A, or Form 1040NR-EZ. You can find online references to this topic and specific income tax forms at the IRS website. Seek professional advice when filing your federal or state income tax return.

See IRS Publication 504, Divorced or Separated Individuals for additional information. The 2004 version of this publication includes special information regarding the tax treatment of alimony before 1985.


Other online references related to how alimony is reported on US Income Tax:

What is Income Tax on Alimony? – Ask Tax Questions
In the US, the alimony payment received, as stated in the law, is part of the income tax on alimony on the tax return of the recipient in the current tax year it the payment is received. Just like any other income taxes, there are also exceptions. In general your ex-spouse or the former spouse can The alimony paid is then reported on the Form 1040 in Line 31. Also, you must report the full amount of the alimony or the separate maintenance you have received during the 

Alimony is considered taxable income – Raleigh Family Law Blog
However, what many do not know is that alimony is considered taxable income. Newly divorced individuals who receive spousal support often learn this the hard way. Alimony is considered to be income, and is therefore taxable. Depending upon the size of the awarded alimony, taxes can be incredibly steep, especially if it comes as a surprise at the end of tax season. It is recommended that 20 Follow us on Facebook · Follow Us On LinkedIn · FindLaw Network.