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New tax reduction strategies carefully explained and exhaustively researched every two weeks. Receive breaking news updates on tax law changes. Members only monthly AMA with TOTTB.tax.
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Tax Rules and Due Diligence for Gambling
The vast range of taxable income and possible deductions and credits an individual may have for federal and state purposes creates a sizeable list of questions to ask clients annually. Regarding types of taxable income alone, the possible sources are almost too numerous to ask. So, is it enough for practitioners to ask for information reporting forms plus a general question about other sources of income? In 2021, the IRS expanded Schedule 1 (Form 1040), Additional Income and Adjustments to Income, changing line 8, “Other income. List type and amount” to lines 8a to 8p to highlight 16 specific types of “other income” with line 8z added for reporting any other income types. One of the specific income types at line 8b is for gambling income. Possibly the detailing of the Form 1040 other income line starting in 2021 signals that the IRS wants self-filers to be aware of what is taxable and that tax preparers should ask clients more questions. In addition to reviewing the tax rules for casual gamblers, two Tax Court bench opinions issued this year are to highlight recent gambling issues the IRS found. The opinions explored the tax gap from gambling activities along with its relevance to due diligence considerations for individuals and tax advisers.
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CURRENT EDITION
Striking a Balance: Pitching to the Umpires of Tax Law – Understanding US Tax Court Judges through the Art of Baseball Analogies
In this fascinatingly original article, we explore the striking parallels between America’s pastime and the high-stakes world of tax litigation. Prepare to be surprised as we reveal the hidden connections between the umpires of the diamond and the judges of the Tax Court. From the precise strike zones of regular judges to the veteran expertise of senior judges, and the specialized skills of special trial judges, you’ll gain a newfound appreciation for the officials who keep the game of tax law fair and balanced.
Dodging the IRS Penalty Flag: Avoiding the Accuracy-Related Penalty
A penalty specifically for taxpayers who have made a mistake on their return. That’s how I explain the accuracy related penalty to taxpayers. This penalty carries a punch as well, with 20% of the tax the IRS didn’t receive due to the taxpayer making a mistake. This seems harsh out of context. The reason for this harshness is because the IRS considers these “mistakes” to be intentional due to taxpayer negligence. This is one of the reasons at my firm that we encourage our clients to take their time when filling out the intake form and gathering their documents. Omitting an income document can be costly in the end to both you and your client. The IRS will hit your client with penalties that they could have avoided, and you may compromise the integrity of your firm.
Talking Taxes and Money With New Graduates
Clients who recently graduated college brim with enthusiasm for adult life. If they’re like most other adults, they’re less enthusiastic about tax strategies and probably don’t know much about grown ups’ taxes. Some might not even know filing deadlines and may never have filed a 1040. Withholding, deductions and dependency, saving for retirement and lowering taxable income: It’s always difficult to realize all that others don’t know about taxes, and here’s how to continue these young clients’ education.
SIMPLIFIED TAX STRATEGIES &
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Think Outside the Tax Box provides tax reduction strategies along with practical
implementation advice in order to reduce your clients’ federal tax bill with ease.
