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FEATURED CONTENT
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
2025 Tax Surprises You Shouldn’t Overlook
There are a few tax rules new for 2025 that may catch some individuals and their tax advisers by surprise. These changes have not received lots of attention either because they are overshadowed by related changes that are more significant, or they were enacted a few years back with a future effective date that arrives in 2025. This article covers changes for 2025 that you will want to be sure to share with clients to avoid surprises at a later date.
Leaving the United States, Part I: Expats
When Americans speak of leaving America, they generally are expressing a desire to live elsewhere in the world for cultural reasons or due to cost of living. These people are called expatriates, aka expats. For clarity, a mere visit to another country does not make you an expat. To be an expat, the move needs to be long-term and often includes working or retiring in the new country. Expats live somewhere outside the U.S., but still have a tax obligation to the U.S. and possibly the country they move to. That will be the focus of this article.
Tax Preparer Hit with Stiff Sentence
John Anthony Castro is a colorful character. He entered several Republican primaries seeking the Presidential slot after failing to win the primary for a Senate seat representing Texas. He sued to have our once and future President Donald Trump be removed from the ballot on Fourteenth Amendment Section 3 grounds. As we can easily infer, those suits went nowhere. But more than anything, John Anthony Castro was a tax guy with a virtual practice with locations in four cities. Not anymore. Now he is resident in a Bureau of Prisons facility – the Federal Medical Center Fort Worth. On October 30, 2024, Judge Terry Means sentenced Castro to 188 months in prison, followed by one year of supervised release and restitution of $277,243, following his conviction on 33 counts of “Aiding and Assisting in the Preparation and Presentation of a False and Fraudulent Return.” Does the sad story of John Anthony Castro hold any lessons for us? Perhaps.
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