Ep. 69 | Gambling + Taxes (say what?)

02/06/24 • 29 min

Fusing the excitement of gambling with the precision of tax planning, hosts Chris Piccuirro and John Tripolsky navigate the complexities of one's obligations to the IRS following those auspicious wins or painfully remembered losses. Both Piccuirro and Tripolsky pepper their discussion with humor and relatable anecdotes that easily resonate with their audience. This episode especially appeals to listeners eyeing the upcoming Super Bowl, the biggest betting event of the year, and those curious about the tax impact of their potential gambling earnings.

Driven by the rapid increase in online and app-based wagering, the duo sheds light on the critical aspects of gambling wins and losses and the importance of honest reporting.

They unpack the intricacies of federal and state tax regulations, emphasizing the significance of obtaining W-2G forms when required and understanding how winnings - both cash and non-cash - are taxed differently. Additionally, they emphasize the crucial nature of record-keeping to ensure compliance and protect against potential audits.

Key Takeaways:

Gambling income, be it from legal or illegal activities, must be reported to the IRS by U.S. residents, regardless of where it was earned globally.
Losses can be deducted up to the amount of winnings, but only if you itemize your deductions on your federal tax return.
Accurate record-keeping of gambling activities is vital for claiming losses and proving the case in an IRS audit.
Non-cash wins are also taxable based on their fair market value and must be reported accordingly.
It's not only about the federal tax; state and local tax implications also come into play, and understanding these nuances is critical for accurate tax reporting.

Notable Quotes:

"IRS considers all gambling winnings as taxable...regardless of if they come from legal or illegal gambling activities."
"You can deduct your gambling losses up to the amount of gambling wins if you itemize your deduction on the federal return."
"Proper record keeping is essential when you're dealing with gambling income and deductions."
"You could actually be paying taxes on gambling winnings, even if you end up with an overall gambling loss for the year."
"If you win a non-cash prize...such as a car, vacation package, or other goods, the fair market value is considered taxable income and must be reported to the IRS."

Resources:

Episode #13: Itemized vs. Standard Deduction

Episode Sponsor:
REPStracker

www.repstracker.com/affiliate/teachingtaxflow (CODE: IFG)

Driven by the rapid increase in online and app-based wagering, the duo sheds light on the critical aspects of gambling wins and losses and the importance of honest reporting.

Key Takeaways:

Gambling income, be it from legal or illegal activities, must be reported to the IRS by U.S. residents, regardless of where it was earned globally.
Losses can be deducted up to the amount of winnings, but only if you itemize your deductions on your federal tax return.
Accurate record-keeping of gambling activities is vital for claiming losses and proving the case in an IRS audit.
Non-cash wins are also taxable based on their fair market value and must be reported accordingly.
It's not only about the federal tax; state and local tax implications also come into play, and understanding these nuances is critical for accurate tax reporting.

Notable Quotes:

"IRS considers all gambling winnings as taxable...regardless of if they come from legal or illegal gambling activities."
"You can deduct your gambling losses up to the amount of gambling wins if you itemize your deduction on the federal return."
"Proper record keeping is essential when you're dealing with gambling income and deductions."
"You could actually be paying taxes on gambling winnings, even if you end up with an overall gambling loss for the year."
"If you win a non-cash prize...such as a car, vacation package, or other goods, the fair market value is considered taxable income and must be reported to the IRS."

Resources:

Episode #13: Itemized vs. Standard Deduction

Episode Sponsor:
REPStracker

www.repstracker.com/affiliate/teachingtaxflow (CODE: IFG)

Previous Episode

Ep. 68 | 2024 IRS Update

In this episode, we reconnect with tax expert Andrew Poulos to jump into the anticipated IRS updates for the year 2024. As we traverse through recent transformations within the IRS, Andrew sheds light on what lies ahead for taxpayers and practitioners. This episode is a treasure trove of information for those looking to stay ahead of the curve in tax planning and compliance.

Listeners will gain a comprehensive understanding of the IRS’s increased budget and its implications for enforcement, notices, and taxpayer interaction. Andrew highlights key areas the IRS is targeting, such as electric vehicle credits, worker classification, and the Employee Retention Credit (ERC). The discussion also ventures into the strategic side of tax representation, emphasizing the importance of building a professional rapport with the IRS for improved outcomes in tax resolution cases.

Key Takeaways:

The IRS is ramping up enforcement by increasing budgets and personnel, leading to a more aggressive approach to tax collection.
Priority areas for IRS enforcement include the Employee Retention Credit (ERC), electric vehicle (EV) credits, and the distinction between employees and independent contractors.
Strategies are key in tax representation, and a good rapport with IRS agents can significantly influence the resolution process.
The IRS is working towards better technology integration to streamline processes like amended returns, yet there are still challenges to overcome.
The IRS engages with tax professionals to bridge the understanding gap and improve the overall tax compliance and resolution landscape.

Notable Quotes:

“Most people will be proactive, but a lot will just kind of lay low either because they don’t have the money, they have other problems going on in life.” - Andrew Poulos
“As they beef up, you can expect more notices to be fired out. They’ll be a bit more aggressive. We’re trying to collect.” - Andrew Poulos
“With strategy... you got to discuss the options and the risks with the client. Let them make the decision and basically execute the strategy when you can.” - Andrew Poulos

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Next Episode

Ep. 70 | When Do I Need Life Insurance?

In this episode of the Teaching Tax Flow Podcast, we are joined by Nate Hamil of Integrated Investment Group to discuss the pivotal question: "When do I need life insurance?"

This episode serves as an essential listening point for anyone looking to understand the intricacies of choosing the right life insurance policy tailored to their unique life circumstances. It opens up a world of financial planning and the intricacies of life insurance policies with a focus on personal responsibility and future-proofing one's financial legacy.

The conversation delves into various types of life insurance policies, including term life and whole life insurance, highlighting their respective benefits, flexibilities, and use cases. They further explore the concept of infinite banking within the sphere of whole life insurance, providing insights that resonate with real estate investors and those seeking alternate financing solutions. We wrap up with a vital exploration of life insurance in the business context, walking listeners through the mechanics of buy-sell agreements driven by life insurance policies, and emphasizing the need for strategic planning in both personal and business domains.

Key Takeaways:

Life insurance should be considered when an individual first feels they have emotional and financial responsibilities towards others.
There are several types of life insurance policies to consider, including term life, which is like renting insurance, and whole life or permanent insurance, which can be structured to provide cash value growth.
Infinite banking is a strategy using whole life insurance where excess premiums can grow and be used for financing future purchases or loans.
For business owners, life insurance can be utilized to draft buy-sell agreements ensuring business continuity and preventing unwanted partnerships in the event of a death.
It is essential to review life insurance policies annually and to consult with non-captive insurance advisors who can offer multiple carrier options for the best-suited policy.

Notable Quotes:

"A life insurance policy is the best last love letter you can ever leave someone you care about."
"Speaking to a professional about this is very important, but having an understanding of it before you go into that meeting so that you best understand how to have conversations is also important."

Resources: