gambling winnings & losses
Your summer vacation may mean a trip to the casino or the racetrack. What will you owe Uncle Sam if Lady Luck happens to be on your side? Gambling winnings are fully taxable and must be reported on your tax return. You must file Form 1040 and include all of your winnings. Gambling income includes, among other things, winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and also the fair market value of prizes such as cars and trips.
Anyone who pays your winnings or awards you a prize is required to issue you a Form W-2G if your winnings are subject to Federal income tax withholding or if your winnings are over a certain amount. However, all gambling winnings must be reported regardless of whether any portion is subject to withholding. In addition, you may be required to pay an estimated tax on your gambling winnings.
If your luck isn’t always so good, you may deduct gambling losses. Losses may be deducted only if you itemize deductions and only if you also have gambling winnings. But remember, the losses you deduct may not be more than the gambling income you report on your return.
Source: www.irs.gov
can you take a home office deduction?
If you plan to run your small business out of your home, you may be tempted to “write-off” many of your household expenses. But how do you know what is deductible and what is not? Generally, expenses related to the rent, purchase, maintenance and repair of a personal residence are not deductible.
However, if you use part of your home for business purposes, you may be able to take a home office deduction. Expenses that can be deducted include the business portion of real estate taxes, mortgage interest, rent, utilities, insurance, painting, repairs and depreciation.
In order to claim a business deduction, you must use part of your home:
- Exclusively and regularly as your principal place of business, as a place to meet or deal with patients, clients or customers in the normal course of your business, or in connection with your trade or business where there is a separate structure not attached to the home; or
- On a regular basis for certain storage use such as inventory or product samples, as rental property, or as a home daycare facility.
In addition, if you work as an employee, you can claim this deduction only if the regular and exclusive business use of the home is for the convenience of your employer and the portion of the home is not rented by the employer.
“Exclusive use” means a specific area of the home is used only for trade or business. “Regular use” means the area is used regularly for trade or business. Incidental or occasional business use is not regular use.
Source: www.irs.gov
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mandatory workplace postings are free
By law, employers must post certain workplace posters in a location where all employees can read them. These posters contain information on a variety of employment laws including child labor, overtime and minimum wage. They are provided by the Pennsylvania Department of Labor and Industry (L & I) at no cost, and can be downloaded at www.state.pa.us, PA Keyword: workplace posters.
You do not need to purchase these posters from companies that solicit sales by implying consequences unless the posters are purchased from them. Since the posters must be displayed by all Pennsylvania businesses, L & I provides them online at no cost to you.
Source: “UC Issues Update”, Vol. 10, No. 2, Summer 2007
year-end accounting adjustments
Accounting adjustments happen throughout the year, however it is most important to adjust your books at least once a year. This annual adjustment is known as the year-end accounting adjustments. These adjustments provided by our office are intended to make your books agree with the tax returns prepared.
These adjustments are usually dated the last day of your fiscal year and are posted as a journal entry. Also keep in mind that these adjustments will affect any reports that you may have already printed. All computerized accounting users should complete this year-end accounting adjustments procedures checklist. This checklist should be completed after your business tax return is completed.
- Review year-end accounting adjustment, add any new general ledger accounts if applicable.
- Post year-end accounting adjustment as a journal entry.
- Print a trial balance report and compare to the one from Stortz.
- If in agreement, fax a copy of Trial Balance report to Stortz. If your report is NOT in agreement, do not go any further. You will need further adjustments - contact your account executive before proceeding.
- Prepare a permanent data backup of the fiscal year and store in safe place. A permanent backup is one that will NOT be used again.
If you are a QuickBooks user you should also set a closing date. This setting can be found under Edit/Preferences/Accounting/Company Preferences. The closing date should be set to the date of your fiscal year end. A password should be set to ensure that no data is changed from the closed year. You should provide Stortz with the password for safekeeping. Peachtree users do not have a closing date option, however you will encounter a year-end close procedure when in period 24 of the accounting cycle. If you have any questions on any adjustments made please contact your account executive.
parents can get day camp credit
Here’s a tax break for the busy summer – many working parents must arrange for care of their children under 13 years of age during the school vacation period. A popular solution – with a tax benefit – is a day camp program.
The cost of day camp can count as an expense toward the child and dependent care credit. Expenses for overnight camps do not qualify. If your childcare provider is a sitter at your home, you’ll get some tax benefit if you qualify for the credit.
The credit is generally 20% to 35% of non-reimbursed expenses; up to $3000 in expenses for one child and up to $6000 for two or more children. The actual credit is also based on your income. The 35% rate applies if your income is under $15,000; the 20% rate, if your income is over $43,000.
Source: www.irs.gov
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