(1) One of the reasons I am called
the “Wandering” Tax Pro is because once the tax filing season ends I enjoy
travel via all methods – car, bus, plane, ship and train (not necessarily in
that order).
Over the past 30+ years my annual
travel itinerary has often included several totally tax-deductible domestic
vacations to attend tax-related conferences, conventions, and other CPE
offerings.
You can deduct expenses that are
“ordinary and necessary” for your business. An “ordinary” expense is one that
is common and accepted in your specific trade or profession and a “necessary”
expense is one that is helpful and appropriate.
One “ordinary and necessary”
business expense for which you can claim a tax deduction is the cost of
education that is (1) expressly required by an employer, by law, or by
government regulation, or (2) maintains or improves skills required in your
current trade or business. If a conference or convention falls under this
category the associated registration and travel expenses are deductible.
I have written a special report -
POSITIVELY TAXES: A TAX DEDUCTIBLE VACATION - that explains in detail how to
make your next vacation tax deductible by attending a job or business related
conference or convention, and includes worksheets to help you keep track of
your deductible expenses.
(2) It has always been important for
frequent gamblers to keep detailed “contemporaneous” records of gambling
activity to minimize the tax cost of winnings, but recent developments have
made this even more vital.
Gross gambling winnings must be
reported as “other income” on Line 21 of your Form 1040. Gambling losses, to the extent of reported
winnings, are allowed as a “Miscellaneous” Itemized Deduction. If you report gambling winnings of $10,000 on
Line 21 of your Form 1040 the most you can deduct as gambling losses on
Schedule A is $10,000. Allowable
gambling losses are deducted in full, and are not subject to the 2% of AGI
exclusion.
Losses from any type of wagering
transaction can be deducted against your reported gross gambling winnings. If
you win in the slots your deduction is not limited to losses from slot
machines. You can deduct losses from the lottery, 50-50s, bingo, table games
such as poker and blackjack, charity raffles, horse racing, keno, etc., up to
the amount of your total winnings.
I have also written a special report
– POSITIVELY TAXES: MINIMIZING REPORTED GAMBLING WINNINGS - that explains the
basics of how gambling activity is taxed describes in detail how recent Tax
Court case decisions allow you to reduce the amount of gambling winnings you
must report, and reduce the tax cost of your gambling activity to a minimum,
via proper documentation of your casino visit wins and losses. It also contains valuable worksheets.
(3) For years now I have been
telling clients and readers that it is your “Adjusted Gross Income”, or AGI,
and not your net taxable income that is the most important number on your tax
return.
Why is AGI so important? Many tax deductions and credits are reduced,
phased-out, or altogether eliminated based on your AGI, or in some cases a
“Modified” AGI, and several items of income are increased, and some deductible
losses are reduced, as this number grows.
There are “above the line”
deductions and “below the line” deductions.
Above the line deductions reduce your Adjusted Gross Income and your Net
Taxable Income. Below the line
deductions, which include the Standard Deduction, Personal Exemptions, and
itemized deductions, reduce Taxable Income, but not Adjusted Gross Income.
A below the line deduction of $1,000
will reduce your tax liability by the amount of your marginal tax rate. For a taxpayer in the 25% a below the line
deduction of $1,000 will reduce the tax liability by $250. But an above the line deduction of $1,000 can
reduce the tax liability by substantially more than $250. It is actually possible for a reduction of only
$5 in AGI to reduce your tax liability by $500 or more!
Guess what? I have written a special report – POSITIVELY
TAXES: REDUCING ADJUSTED GROSS INCOME – that discusses how to reduce your 2016
AGI during the year and when preparing your Form 1040 and minimize your tax
liability. In it I explain how a
reduction of $5 in AGI can reduce your tax liability by $500 or more.
The above referenced special reports
are the first 3 items in MY NEW DOLLAR STORE (a work in process) - and are available to you, as you might
expect, for only $1.00 each sent as
a pdf email attachment, or $2.00 each for a print edition sent via postal mail.
If you enjoy reading THE WANDERING
TAX PRO and have found it helpful to you over the years one way you can say
“thank you” is by purchasing one of the above POSITIVELY TAXES reports.
To order send your check or money
order, payable to TAXES AND ACCOUNTING, INC, for $1.00 or $2.00 for each report
you want and your email or postal address to –
MY NEW DOLLAR STORE
TAXES AND ACCOUNTING, INC
POST OFFICE BOX A
HAWLEY PA 18428
BTW – I also have more extensive and
detailed TAX DEDUCTION GUIDES available for $2.00 or $4.00 each. Click here for more information.
TTFN
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