Taxation information and tips

Do You Have To Declare Casino Winnings?

I am no gambler but I, like a lot of other people, do enjoy a game of poker every now and then. I’m no professional at it, I must admit, but I am however the better player in our weekly poker game group. A bachelor party and a little urging from a few friends landed me in a poker table at a modest casino where I live and what do you know, I won! Just enough money to buy my friends a few rounds of drinks. The next day, I got to thinking, should I declare this winning to my bookkeeper? I went online to find out and every google result landed me with something like this site. After a couple of minutes of searching i wasnt surprised that the the short answer is, yes, winnings incurred through gambling are taxable. I was shocked and relieved. I dove deeper to investigate.

Report All Winnings

By law, all winnings through gambling are taxable and winners are required to report them as “other income.” Normally, you receive one or more Form W-2G where the amount of your winnings is reported as well as the tax that was withheld. Gambling winnings include:

  • Casino Winnings
  • Slot winnings
  • Poker tournaments
  • Lotteries
  • Sweepstakes
  • Raffles

Gambling winnings are subject to a 25% tax. However, winnings over $5,000 are subject to withholding tax. For non-cash prizes, the winner is responsible for the taxes on the fair market value of the prize received.

Deductibles are Permitted in Certain Cases

If you are honest with your winning, the IRS may allow you to deduct some gambling losses. They can deduct losses up to the amount of their winnings and only if their deduction is itemized properly. It helps if you declare all your winnings and losses separately as opposed to reporting a net amount. Losses through gambling are deducted on Schedule A as a miscellaneous deduction which is not subject to a 2% limit. If you are a regular guest at a casino, it helps to keep a thorough record of all your winnings and losses, documents such as receipts, tickets, payment slips, Form W-2G, and Form 5754. More of this could be found in the post about tax reduction tips.

These are very important documents that can serve as proof if you want to deduct your losses. The IRS required that the following information be kept:

  • Date of both winnings and losses
  • Gambling activity type
  • Name and location of the establishment
  • People you were with during the activity
  • The amount of winnings and losses

Illegal Gambling Winnings are also Taxable

A huge amount of money is spent on illegal gambling activities including sports betting. The winnings you receive from these illegal gambling activities are still subject to taxation and therefore should be declared. So the bottom line is, yes, my meager winning, which I completely drained during that weekend excursion, is still subject to taxation. Nonetheless, I had a great time. For the first time, I sat in a real poker table facing unfamiliar faces and won. Both I and my friends are quite happy and I consider this a lesson for when I end up sitting in another poker table in the future. I just hope it wasn’t beginner’s luck that landed me that money.

Keep Track Of Your Finances

Let’s face it, to survive in this life; we all have to know how to manage our finances. This is one skill I wish schools would inculcate heavily unto students. Many college graduates, though quite knowledgeable in their various fields, have no idea how to manage their money. A lot of them enter their 30s or 40s with barely any savings. Others don’t even know how to file their taxes, needing a lot of help from professionals or ignore it altogether. I made this article as an introductory guide for people who want to learn how to handle their finances.


Track Your Finances Manually

  1. Make a System

Be consistent. Whatever way you want to log your finances, either through pen and paper or through an Excel file, do it diligently and consistently. I prefer using Excel because it is easy to calculate my expenditures. I also include important information such as dates, the amount spent or acquired, and the kind of purchases I make.

  1. Carry a Notebook

The simplest way to keep track of your finances is by keeping a small notebook for you to jot down your expenses. An alternative is using your phone. This is more doable for me because I barely carry anything besides my phone.

  1. Use a Spreadsheet

Microsoft Excel is your friend and it is an amazing friend. Learning how to use it well will only benefit your financial management skill. I find it easier to keep track of my expenses with Excel and an added bonus is its ability to create graphs which makes it easier to visualize my finances.

Download a Personal Finance App

  1. a. Do Research on the Best Finance App for You

There are many apps available and most of them are free. They range from simple finance tracking to comprehensive asset management. I chose a simple one tracks my daily expenses then I transfer it to Excel.

  1. Input the Necessary Information into the App

Input your monthly salary into the app, the important bills you need to pay. Include also your weekly grocery list. The more information provided, the accurate it is for the app to track your finances.

  1. Study its Analysis

Most apps provide an analysis of your finances. The app I use provides weekly and monthly analysis for me to review. I review it to make sure I’m on track with my weekly and monthly goal, make sure I’m not overspending, and then I consolidate the results into the Microsoft Excel spreadsheet. These are just a few key actions that I consider as the first few steps in learning how to manage your finances. There are more steps to be taken to truly take full control of your finances but these initial ones are a step in the right direction. The secret is to stay consistent and to never stop learning. There are numerous resources available for those willing to learn. A great resource is the Internet. It is a treasure trove of information that should be used well.

Life Working as an Accountant

I was the type of kid who enjoys numbers growing up. I remember hearing my classmates complaining about our math exams and homework, saying it’s difficult and they have no clue what the questions were about. I kept silent but I always thought it was rather fun solving those problems. Math just made sense to me and I didn’t even have to try too hard to get good grades. I struggled in other subjects, though, but nothing in math class can mess me up. As high school graduation loomed nearer and nearer, I was faced with a dilemma: what degree should I pursue? I got accepted to 3 universities I applied for; I have stellar records, all for different fields. I got accepted at a good engineering school, the other one is known for their accountancy department. The third was a safety net. I debated between the first two so, like always, I relied on research. I wanted to know what a regular day is like for an accountant.

Working for a Big Accounting Firm

Working for an accounting firm isn’t much different than any other fields. Most firms require their employees to work nine to five jobs with weekends off. Most accountants start their days checking their emails, looking for important client queries that need addressing. The rest of the day is spent prioritizing their needed deliverables for the day and completing it. These deliverables include VAT returns, accounts, client queries, tax returns, and more. They are also required to attend occasional meetings. Before they leave for home, they check to make sure all their work are completed for the day and a cursory scan for any client emails that need to be answered.

Running Your own Accounting Firm

A day for an accountant with their own firm is a bit different than those working for a firm. They still need to be at the office from 9 a.m. to 5 p.m. during weekdays with the occasional Saturdays during tax season. They still have to answer client queries through email and phone but given their advanced level in the field, they need to take up more responsibilities in the office. They sometimes have to attend meetings with other organizations they have partnered with. They do payroll for their employees as well preparing their sales tax returns. Training new and existing employees also fall under their jurisdiction.

Being a Freelance Accountant

Whether it is a full time or part time, many accountants love doing freelance jobs. Most full-time freelancers have the luxury of flexibility and the ability to choose specific accounting jobs. They can choose to do tax returns exclusively or bookkeeping for various clients. Many freelancers can choose when to start their day although most try to follow a regular office hour. Communication is through emails or third-party software that enables them to communicate with clients so those are checked for any pending emails that need immediate attention. Throughout the rest of the day, they are on various software like Xero, Practice Ignition, and Salesforce for the various jobs they need to complete.

Tax Reduction Tips

People often see taxes as cumbersome especially when there are piled up home bills waiting to eat up your next paycheck. However, being an employee, we are all subjected to pay due taxes to contribute to a better society and employers are no exception as well. Whether you’re having a tight budget, keeping a business afloat, or someone who’s hardly keeping up with daily expenses – there are several ways you can do to reduce your taxes. You might not see the benefits now but you will soon reap the fruits of your labor if you stick to these top five tax reduction tips.

Keep Track of Tax Deductions

You might be surprised as to how much you can get on your tax refund by the end of the year if you keep track of tax records. One simple way to do this is to keep the receipts of tax deduction claims. All you have to do is just put them in a labeled folder so it’ll be easy to get ahold of once you need them. You can even input them in your logbook and use a software which updates your tax account information. These are very easy and simple steps which can save you thousands of dollars per year!

Pay Your Home Loan

When you pay your mortgage off slowly, you’re not only reducing the mortgage amount and the years you need to pay but you’re also reducing taxes. Instead of squirreling away money in savings bonds which are taxed, pay off your mortgage and you’ll be happier with no taxes on home loan payments!

Register the Shared Savings Account to Low-Income Earner

Shared savings from a couple can earn some interest but are also taxed depending on the interest earned on that savings account. Register the savings account name to the lowest income earner so the least tax will also be imposed on that account. Also, keep track of your finances!

Redeem Charitable Donations on Your Tax Returns

We know that donating meager of hefty amounts to charitable donations are for a good cause. But in case you don’t know, these donations can be claimed on your tax return. All you have to do is keep all the receipts every time you donate, but also make sure it’s a registered charity or else, the receipts will be forfeited from being claimed on your tax return. It’s also important to note that the amount might not be given to you in cash value but is deducted from the taxable income instead.

Consult a Tax Accountant

Tax accountants have the knowledge on the updated tax rules and regulations and the expertise to evaluate several ways on how to reduce your tax depending on your lifestyle. The best tip is to find time to talk to a tax accountant so he can review your account as well as your refund. A tax accountant might even discover seemingly trivial errors that can be adjusted on your tax refund. Tax legislation is an arcane topic and it’s never a good idea to take these matters into your own hands. Getting advice from the right people will save you time and not to mention – money.

What is a 401k?

I think what happens after retirement can be a formidable chapter in one’s life. We get so accustomed to the usual routine that it’s terrifying not knowing what do and worse – not having the money to do what we want.

Enter 401k plans.

The 401k retirement plan is a great opportunity for us, the employees, to be able to set aside passive savings and let it accumulate for as long as we work for the company. In other words, it’s a retirement savings plan which is fully covered by the employer.

How Does 401k Work?

  • Our paycheck gets deducted with a certain amount depending on which plan is established between us and the employer
  • Employees must meet eligibility requirements to avail of the 401k plans
  • Taxes are then taken out once the money is withdrawn from the account
  • Most employers also match contributions
  • 401k retirement plans can be individually-designed or IRS-approved
  • Penalties are incurred if the money is withdrawn before the set retirement age

How Did 401k Start?

We have to give credit where credit is due. And Ted Benna is the one who spearheaded the 401k plan – by accident.

In 1978, there was a Revenue Act wherein lawmakers wanted the company executives to limit their access to cash-deferred plans since the companies wanted to take advantage of these plans by allowing more money to be accumulated. That’s when Ted Benna made his own interpretation that gave rise to the 401k plan in the 1980s. Back then, only large companies offered these to employees. However, 94 percent of private companies offer them to employees today.

401k Eligibility Requirements

Generally, employees are qualified when they meet these requirements:

Employees must be 21 years of age

Employees are excluded when they haven’t reached the minimum age requirement of 21. But there is no maximum age requirement. Let’s say, for example, an employee’s plan can’t be revoked if the employee reaches the age of 100. That means, there is no limit as long the employee is still working for the company.

Employees must work for the company for at least a year

One year of service in the company means the employee must achieve a minimum requirement of 1,000 hours of service in a span of a year. However, some employers can have the leniency of requiring 1,000 hours of service in a span of less than a year.

Why do I think 401k plans are beneficial?

Since the birth of 401k, we now see our future after retiring as clear as day. I personally believe this gives employees a chance for squirreling away some money for the rainy day. As we all know, the economy’s volatility can have a huge impact on how we live. What we can afford today might be too much tomorrow.

401k plans allow employees to adhere to saving a meager amount in every paycheck. Instead of wasting away our money on the daily needs and wants, we can breathe a sigh of relief knowing that our retirement plan is a reward worth having in the end.