Author: Leon Clinton

Whether you play the lottery, roll the dice, play cards, or bet on the ponies, all of your gambling winnings are taxable and must be reported on your tax return. If you gamble, these tax tips can help you at tax time next year: Here’s what you need to know about figuring gambling income and loss.

1. Gambling income. Income from gambling includes winnings from lotteries, raffles, horse races and casinos. It also includes cash and the fair market value of prizes you receive, such as cars and trips and you must report them on your tax return

2. Payer tax form. If you win, you may receive a Form W-2G, Certain Gambling Winnings, from the payer. The form reports the amount of your winnings to you and the IRS. The payer issues the form depending on the type of game you played, the amount of winnings, and other factors. You’ll also receive a Form W-2G if the payer withholds federal income tax from your winnings.

3. How to report winnings. You must report all your gambling winnings as income on your federal income tax return. This is true even if you do not receive a Form W-2G. If you’re a casual gambler, report your winnings on the “Other Income” line of your Form 1040, U. S. Individual Income Tax Return.

4. How to deduct losses. You may deduct your gambling losses on Schedule A, Itemized Deductions. The deduction is limited to the amount of your winnings. You must report your winnings as income and claim your allowable losses separately. You cannot reduce your winnings by your losses and report the difference.

5. Keep gambling receipts. You must keep accurate records of your gambling activity. This includes items such as receipts, tickets or statements. You should also keep a diary or log of your gambling activity. Your records should show your winnings separately from your losses.

If you have questions about gambling income and losses, don’t hesitate to call.

• By Leon Clinton
• October 28, 2016

Millions of people enjoy hobbies such as stamp or coin collecting, craft making, and horse breeding, but the IRS may also consider them a source of income. As such, if you engage in a hobby that provides a source of income, you must report that income on your tax return; however, taxpayers (especially business owners) should be aware that the way income from hobbies is reported is different from how you report income from a business. For example, there are special rules and limits for deductions you can claim for a hobby.

Here are five basic tax tips you should know if you get income from your hobby:

Business versus Hobby. There are nine factors to consider to determine if you are conducting business or participating in a hobby. Make sure to base your decision on all the facts and circumstances of your situation. To learn more about these nine factors, please call.

Allowable Hobby Deductions. You may be able to deduct ordinary and necessary hobby expenses. An ordinary expense is one that is common and accepted for the activity. A necessary expense is one that is helpful or appropriate. Don’t hesitate to call if you need more information about these rules.

Limits on Expenses. As a general rule, you can only deduct your hobby expenses up to the amount of your hobby income. If your expenses are more than your income, you have a loss from the activity. You can’t deduct that loss from your other income.

How to Deduct Expenses. You must itemize deductions on your tax return in order to deduct hobby expenses. Your costs may fall into three types of expenses. Special rules apply to each type. Use Schedule A, Itemized Deductions to report these types of expenses.

Use a tax professional. Hobby rules can be complex, but using a tax professional makes filing your tax return easier. If you need have any questions about reporting income from a hobby, please call.

• By Leon Clinton
• October 25, 2016

Keeping good records is essential for every business owner no matter how small. But whether it’s keeping track of mileage, documenting expenses, or separating personal from business use, keeping up with paperwork is a seemingly never ending job.

No matter how good your intentions are in January, the chances are good that by summer that mileage log is looking a bit empty. Even worse, you could be avoiding tracking your mileage altogether–and missing out on tax deductions and credits that could save your business money on your tax return.

The good news is that if you’re tech savvy, there are a number of phone applications (apps) that could help you track those pesky business miles–and ditch the paper once and for all.

Most of these apps are useful for tracking and reporting expenses, mileage and billable time. They use GPS to track mileage, allow you to track receipts, choose the mileage type (Business, Charitable, Medical, Moving, Personal), and produce formatted reports (IRS compliant HTML and CSV tax return reports) that are easy to generate and share with your CPA, EA, or tax advisor.

Here are three popular apps that help you track your business mileage:

1. TripLog – Mileage Log Tracker

Works with: Android and iPhone

What it does: Tracks vehicle mileage and locations using GPS

Useful Features:

Automatic start when plugged into power or connected to a Bluetooth device and driving more than five mph
Reads your vehicle’s odometer from OBD-II scan tools
Syncs data between the web service and multiple mobile devices
Supports commercial trucks including per diem allowance, state-by-state mileage for IFTA fuel tax reports, and DEF fuel purchases and gas mileage
2. Track My Mileage

Works with: Android and iPhone

What it does: Keeps track of mileage for business or personal use

Useful Features:

Provides mileage rates used to calculate the deductible costs of operating your automobile
Associate and group trips by client
Multiple driver and vehicle tracking
Localized and translated into more than 20 languages
3. BizXpenseTracker

Works with: iPhone and iPad

What it does: Tracks mileage, as well as expenses and billable time

Useful Features:

Allows you to choose which way you want to track your mileage
Remembers Frequent trips
PDF format or CSV for importing into Excel
Email your reports and photo receipts
Call the office today if you have any questions about using apps that track business mileage or need help choosing the right one for your business needs.

• By Leon Clinton
• October 19, 2016