5 TIPS ON GAMBLING INCOME AND LOSSES

Do you bet on the ponies, play cards or enjoy slot machines, then you should know that as a casual gambler, your gambling winnings are fully taxable and must be reported on your income tax return. You can also deduct your gambling losses…but only up to the extent of your winnings.

Here are 5 important tips about gambling and taxes:

1. Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and the fair market value of prizes such as cars and trips.

2. If you receive a certain amount of gambling winnings or if you have any winnings that are subject to federal tax withholding, the payer is required to issue you a Form W-2G, Certain Gambling Winnings. The payer must give you a W-2G if you receive:

• $1,200 or more in gambling winnings from bingo or slot machines;
• $1,500 or more in proceeds (the amount of winnings minus the amount of the wager) from keno;
• More than $5,000 in winnings (reduced by the wager or buy-in) from a poker tournament;
• $600 or more in gambling winnings (except winnings from bingo, keno, slot machines, and poker tournaments) and the payout is at least 300 times the amount of the wager; or
• Any other gambling winnings subject to federal income tax withholding.

3. Generally, you report all gambling winnings on the “Other income” line of Form 1040, U.S. Federal Income Tax Return.

4. You can claim your gambling losses up to the amount of your winnings on Schedule A, Itemized Deductions, under ‘Other Miscellaneous Deductions.' You must report the full amount of your winnings as income and claim your allowable losses separately. You cannot reduce your gambling winnings by your gambling losses and report the difference. Your records should also show your winnings separately from your losses.

5. Keep accurate records. If you are going to deduct gambling losses, you must have receipts, tickets, statements and documentation such as a diary or similar record of your losses and winnings.

TIMOTHY GEITHNER, DAVE CAMP HUDDLE ON 'FISCAL CLIFF'

House Ways and Means Committee Chairman Dave Camp quietly huddled with Treasury Secretary Timothy Geithner Wednesday morning about the so-called fiscal cliff.

The meeting marks an uptick in discussions between the Obama administration and congressional Republicans in gaming out the year-end expiration of all income tax rates, the hiking of the nation’s borrowing cap and massive cuts to domestic and Pentagon spending set to kick in at the beginning of 2013.

To read more of this article: CLICK HERE

KANSAS CITY FEDERAL RESERVE ON THE NEBRASKA ECONOMY

The Kansas City Federal Reserve just issued a paper on the Nebraska economy and I thought that you would be interested the farm numbers especially how it compared the current situation with the problems agriculture had back in the 1980’s.  To equal a 1980s farm income demise, current farm revenue would need  to drop by 21.4% and the value of total farm production would need to decrease by 15.7%.

The paper also estimated that crop prices would need to drop to the following prices:

§ Corn – $3.49 per bushel

§ Wheat – $3.96 per bushel

§ Soybeans – $9.00 per bushel

This is not a technical paper but more graphs and pictures.  I think this is worth spending a few minutes looking at.

 

To read the paper: CLICK HERE

US FARM LAND VALUES 2011

In the United States, farm real estate value, a measurement of the value of all land and buildings on farms, averaged $2,350 per acre for 2011, up 6.8 percent from 2010. Regional changes in the average value ranged from a 15.9 percent increase in the Corn Belt region to a 2 percent decline in the Southeast region. The highest values remained in the Northeast region at $4,690 per acre. The Mountain region had the lowest value, $923 per acre.

The cropland value increased by $260 per acre (9.4 percent) to $3,030 per acre. In the Northern Plains and Corn Belt regions, the average value increased 17.2 and 16 percent, respectively, from the previous year. However, in the Northeast and Southeast regions, values decreased by 1.3 percent and 1.1 percent, respectively.

Meanwhile, pasture value increased to $1,100 per acre or 1.9 percent above 2010. The Southwest region had the largest percentage decrease in value, 8.4 percent below 2010. The Corn Belt and Northern Plains regions had the highest percentage increase, both 6.6 percent above 2010.

PAUL RYAN

Q: You seem like a pretty bright guy. What do you think about this? Some of my friends are critical of Paul Ryan because of his budget proposal that he put out a few years back. They say that he would take away a lot of benefits that the government gives us. I have heard others say it is better to do something.

Is his plan something I should vote for?

A:  Thanks for the compliment. My ex would not agree with you about me being such a bright guy.

Before I respond, I have a couple of comments about your question. First of all, when you vote for president there is really only so much they can do without the backing of Congress. Secondly, Paul Ryan is the vice presidential candidate. Romney will be the prime idea guy so voting for Romney/Ryan is not a vote for Paul Ryan's budget proposal.

I also have to make a comment about your friends statement that "he would take away a lot of benefits that the government gives us." You must realize that if the government gives us a benefit that cost money, they must either take money from others or print more money that puts us further in debt.

Now, finally to respond to your question - We have to go back to early 2011 when Paul Ryan was Chairman of the House Budget Committee. In the opinion of many economists, unlike the typical Congressional budget resolution, the Ryan plan was not only comprehensive in its scope, but it was presented in a refreshingly transparent manner.

Every proposal in this nearly 75-page document—from discretionary spending and Medicaid, to taxes and welfare spending—was explained and justified in a way that any taxpayer could understand.

The press and critics zeroed in on Ryan's bold proposals for reforming entitlements, such as Medicaid and Medicare. Unfortunately, serious attention was not given to the tax side of the plan. Making the tax system conducive to long-term economic growth is just as critical to solving the nation's fiscal crisis as is reining in uncontrolled spending.

I could go on and on about the plan, but let me say this - At least it was a starting point. In my opinion, at least he and his committee had the guts to start the process.

SECTION 179 FOR 2013

As we are doing year end tax planning, the question has come up several times on how to plan for the fast write off of equipment called section 179. It is confusing. The current law is a limit of $25,000 for 2013, but will Congress change this low number. Who knows?

Both the President and Congress have discussed increasing the deduction up to $500,000 with a phase-out starting at $2 million. It appears at the moment that the Democrats are pushing this more than the Republicans, but they have other incentives that may provide small business tax relief similar to the Section 179 deduction.

There is even a chance that it may go to $500,000 from the current $139,000 in 2012. Unfortunatey we will not know until the election is over.

THIS TYPE OF CHARITABLE CONTRIBUTION DOES NOT WORK

I don’t know how many times I have been asked if this charitable strategy will work. Give money to a charitable organization and then have them give a scholarship to a related party. Someone apparently tried this and the IRS weighed in.

In a recent case, the IRS ruled that making a donation for one person’s benefit kills the tax deduction. In this situation, a donor who contributed to her church’s scholarship fund wanted the church to use the money she gave for the college tuition costs of the minister’s daughter. The contribution is recast as a gift from the donor to the minister’s daughter, and no deduction is permitted.