Latest news with #NationalAssociationofTaxProfessionals
CNBC
4 days ago
- Business
- CNBC
Trump's ‘no tax on tips' sparks questions for workers: ‘We're looking at a crystal ball,' expert says
President Donald Trump's "big beautiful bill" includes a section called "no tax on tips" — an idea that both Republicans and Democrats floated during the 2024 that the provision has been enacted, questions remain about how the tax break works and who qualifies. Despite its name, "no tax on tips" doesn't eliminate tax on tips, which are still subject to payroll and state taxes. Instead, it's a deduction worth up to $25,000. The tax break is available from 2025 through 2028. It phases out, or gets reduced, once modified adjusted gross income exceeds $150,000. However, the IRS needs to clarify which occupations qualify, which is expected to come in early October, according to the agency. Meanwhile, "we're looking at a crystal ball" for guidance, said Larry Gray, a Missouri-based certified public accountant who serves as IRS liaison for the National Association of Tax Professionals. More from Personal Finance:Trump's 'big beautiful bill' caps student loans. What it means for youWhy 22 million people may see a 'sharp' increase in health premiums in 2026Trump's 'big beautiful bill' cuts SNAP for millions of families: Report In 2023, there were roughly 4 million U.S. workers in tipped occupations, representing 2.5% of all employment, according to estimates from The Budget Lab at Yale University. The cohort of workers who qualify for the tax break is even smaller — actors, musicians and singers, directors and playwrights — are included among the professions that are already prohibited under the legislation's text. Here's a breakdown of what to know about Trump's tip deduction. As written, "qualified tips" are cash tips an employee earns. This includes tips a customer offers in cash or added to a credit card charge, as well as payouts under a tip-sharing arrangement. Yet, the law also says that the tip must be paid voluntarily and determined by the customer or payor, which can put other forms of gratuities or mandatory service charges in question. "It's an entirely voluntary transaction," said Alex Muresianu, a senior policy analyst at the Tax Foundation. For example, the definition may exclude mandatory service fees, such as an automatic gratuity a restaurant might tack on for a large dining party. "Based on the plain text of the law, it's hard to argue that that's something that's given voluntarily," said certified financial planner and enrolled agent Ben Henry-Moreland, a certified financial planner with advisor platform who analyzed the legislation. To qualify for the deduction, tips must be "properly reported," according to Melanie Lauridsen, AICPA's vice president of tax policy & advocacy. That means employers must report the worker's tips on so-called information returns — such as Form W-2 or 1099 — with a copy going to the employee and the IRS. However, Trump's legislation also increased the income thresholds for certain information returns. That could raise eligibility questions for tipped workers who don't get a form. For example, Form 1099-K reports business transactions from apps, such as PayPal or Venmo, along with gig economy platforms like Uber or Lyft. For 2025, the 1099-K reporting threshold returns to $20,000 and200 transactions. Previously, the threshold was $2,500 for 2025. Starting in 2026, the threshold for 1099-NEC, which reports contract income, jumps from $600 to $2,000. However, there is also uncertainty about whether workers fully disclose cash tips to their employer and the IRS. "The elephant in the room around this whole 'no tax on tips' provision is, so many tips go unreported to begin with," said Henry-Moreland.
USA Today
11-07-2025
- Business
- USA Today
Gamblers will pay more taxes in 2026 and beyond when Trump's 'Big, Beautiful Bill' hits
Gamblers lost a bit of a tax break in the nearly 900-page mega tax-and-spending bill that President Donald Trump signed into law July 4. If you won $1,000 betting on the Super Bowl in 2025, for example, you still could claim up to $1,000 in gambling losses if you itemize all your deductions when you file your federal income tax return next year. And you wouldn't be taxed on that win in this example. But the game's over when tax rules for gambling change beginning in 2026. What are the tax rules when it comes to gambling? What remains true: You can claim gambling losses up to the amount of your winnings only if you itemize all your deductions. Most people don't itemize these days because they get a better tax break by taking the standard deduction. The amount of losses you can deduct are limited by your winnings. Deductible losses still will not be able to exceed total winnings for the year. How the new tax law changes things for legal gamblers What's changed: Beginning in 2026, the tax law shifts just enough to irk plenty of people who dream big by heading to the casino, betting online or buying lottery tickets. A $1,000 win in 2026 and afterward will mean that you can only deduct 90% of your losses — or $900 in this example. Someone who wins in this example would pay taxes on $100 in winnings in 2026 when they file that year's tax return. Economic outcomes: Trump's mega tax and spending law will have small economic impact, forecasters say "Instead of gambling losses being deductible to the full extent of gambling winnings, they're going to be limited to 90%," said Tom O'Saben, enrolled agent and director of tax content and government relations for the National Association of Tax Professionals, which has 23,000 members. Make no mistake, the new 90% limit has no impact on the 2025 tax returns that will be filed early next year. It would only apply to winnings and losses that take place in 2026 and after. Casual gamblers cannot deduct expenses related to their lodging, transportation, or food and other incidental expenses during their gambling, Mark Steber, chief tax information officer for Jackson Hewitt Tax Services, told the Detroit Free Press, part of the USA TODAY Network, earlier this year. And that's still true going forward. Yet, he noted, someone who is a professional gambler and considered self-employed would be eligible to deduct travel and lodging expenses while working. The new tax law, though, clarifies that any expense related to carrying on gambling activities — such as travel, admission fees and lodging related to professional gambling — would be treated as a gambling loss and then subject to that 90% cap, O'Saben explained in a presentation on July 9 to tax professionals. As a result, everyone from professional poker players to young gamblers using an app to bet on football are screaming foul and viewing the change as a 10% penalty of sorts. Some already want to see the new tax rule changed On July 7, U.S. Rep. Dina Titus introduced legislation to restore the 100% deduction for gamblers. The Nevada Democrat calls her bill the My FAIR BET Act — which calls for "Fair Accounting for Income Realized from Betting Earnings Taxation." "It gives everyone — from recreational gamblers to high-stakes gamblers — a fair shake," Titus said in a statement. "We should be encouraging players to properly report their winnings and wager using legal operators. The Senate change will only push people to not report their winnings and to use unregulated platforms.' The American Gaming Association applauds Titus for introducing the FAIR BET Act, as the group would like to see congressional leaders and the Trump administration restore the long-standing tax treatment of gaming losses, according to a group spokesperson. The industry group — whose members include DraftKings, MGM Resorts International, Churchill Downs, FireKeepers Casino Hotel, Cherokee Nation Entertainment and other big names — earlier in the spring urged congressional leadership to not only "maintain the deduction for taxpayers who itemize, but — as a matter of fairness — Congress should consider allowing for non-itemizers to net their gambling wins and losses for purposes of reporting adjusted gross income." "Under current policy," according to the letter sent in May to congressional leaders, "most taxpayers do not itemize and many gaming customers are subject to the mismatch of being taxed on the full amount of their gross gaming wins with no ability to net their losses." "As a result, those who are in a losing position at the end of the year are in effect being taxed on income they have not received," according to the letter. Others are speaking out on social media, too. A Nevada-based tax preparer posted on X that high-stakes gamblers will be hurt if this law with the 90% limit stays in place and goes into effect in 2026. "But so will the average gambler who 'gets lucky,' " said Russell Fox, whose profile also proclaims that he's a poker player. "Vegas was built on the dream, and if that dream is removed (or drastically lessened) by a bad law, Vegas will be hurt." I'd imagine the same would be true for casinos in a million other spots where many people choose to legally gamble. Contact personal finance columnist Susan Tompor: stompor@ Follow her on X @tompor.
Yahoo
15-04-2025
- Business
- Yahoo
How to file for an extension, and other Tax Day advice
NEW YORK (AP) — If you've waited till the last minute to file your taxes, don't panic. You still have time to get it done. And if you're worried that you still might not be able to finish in time, you can file for an extension, which will give you until Oct. 16 to file your return. What do I need to file my tax return? Generally, every tax-filer needs the following at hand — your Social Security number — W-2 forms, if you're employed — 1099-G forms, if you're unemployed — 1099 forms, if you're self-employed — Savings and investment records — A sense of any eligible deductions, such as education expenses, medical bills, charitable donations, etc. — A sense of relevant tax credits, such as the child tax credit, retirement savings contributions credit, etc. To find a more detailed document list, visit the IRS website. Tom O'Saben, director of tax content and government relations at the National Association of Tax Professionals, recommends gathering all your documents in one place before you start your tax return, as well as having your documents from last year if your financial situation has drastically changed. Theresa Grover, site coordinator for the Volunteer Income Tax Assistance (VITA) program at Northeast Wisconsin Technical College, also recommends taxpayers create an identity protection PIN number with the IRS to guard against identity theft. Once you create a number, the IRS will require it to file your tax return. How do I file for an extension? If you run out of time to file your tax return, you can file for an extension to take more time by using your preferred tax software, with the IRS Free File tool, or via mail. However, it's important to remember the extension is only to file your tax return, not to pay owed taxes. If you owe taxes, you should pay an estimated amount before the deadline to avoid paying penalties and interest. If you expect to receive a refund, you'll still receive your money when you file your taxes. The deadline to file for an extension is Tuesday, April 15, which will give you until Oct. 16 to file. How can I avoid mistakes filing my taxes? Many people fear getting in trouble with the IRS if they make a mistake. To avoid common errors: — Double check your name on your Social Security card. When working with clients, O'Saben always asks them to bring their Social Security card to double-check their number and their legal name, which can change after marriage, for example. 'You may have changed your name but you didn't change it with Social Security,' O'Saben said. 'If the Social Security number doesn't match the first four letters of the last name, the return will be rejected and that will delay processing.' — Search for tax statements if you've opted out of paper mail. Many people like to opt out of snail mail, but paper mail can also include your tax documents. 'If you didn't get anything in the mail doesn't mean that there isn't an information document out there that you need to be aware of and report accordingly,' said O'Saben. — Report all of your income. If you had more than one job in 2022, you need the W-2 forms for each — not just the one from the job you ended the year with, said Christina Wease, interim director of the tax clinic at Michigan State University. What resources are available? For those who make $73,000 or less per year, the IRS offers free guided tax preparation that does the math for you. If you have questions while working on your tax forms, the IRS also offers an interactive tax assistant tool. Beyond TurboTax and H&R Block, taxpayers can also hire licensed professionals, such as certified public accountants. The IRS offers a directory of tax preparers across the United States. The IRS also funds two types of programs that offer free tax help: Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly program (TCE). People who earn $60,000 or less a year, those who have a disability, and those who speak limited English all qualify for the VITA program. Those who are 60 or older qualify for the TCE program. The IRS has a site for locating organizations hosting VITA and TCE clinics. If you have a tax problem, there are clinics around the country that can help you resolve these issues. Generally, these tax clinics also offer services in other languages such as Spanish, Chinese and Vietnamese. ____ The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
The Hill
15-04-2025
- Business
- The Hill
How to file for an extension, and other Tax Day advice
NEW YORK (AP) — If you've waited till the last minute to file your taxes, don't panic. You still have time to get it done. And if you're worried that you still might not be able to finish in time, you can file for an extension, which will give you until Oct. 16 to file your return. What do I need to file my tax return? Generally, every tax-filer needs the following at hand — your Social Security number — W-2 forms, if you're employed — 1099-G forms, if you're unemployed — 1099 forms, if you're self-employed — Savings and investment records — A sense of any eligible deductions, such as education expenses, medical bills, charitable donations, etc. — A sense of relevant tax credits, such as the child tax credit, retirement savings contributions credit, etc. To find a more detailed document list, visit the IRS website. Tom O'Saben, director of tax content and government relations at the National Association of Tax Professionals, recommends gathering all your documents in one place before you start your tax return, as well as having your documents from last year if your financial situation has drastically changed. Theresa Grover, site coordinator for the Volunteer Income Tax Assistance (VITA) program at Northeast Wisconsin Technical College, also recommends taxpayers create an identity protection PIN number with the IRS to guard against identity theft. Once you create a number, the IRS will require it to file your tax return. How do I file for an extension? If you run out of time to file your tax return, you can file for an extension to take more time by using your preferred tax software, with the IRS Free File tool, or via mail. However, it's important to remember the extension is only to file your tax return, not to pay owed taxes. If you owe taxes, you should pay an estimated amount before the deadline to avoid paying penalties and interest. If you expect to receive a refund, you'll still receive your money when you file your taxes. The deadline to file for an extension is Tuesday, April 15, which will give you until Oct. 16 to file. How can I avoid mistakes filing my taxes? Many people fear getting in trouble with the IRS if they make a mistake. To avoid common errors: — Double check your name on your Social Security card. When working with clients, O'Saben always asks them to bring their Social Security card to double-check their number and their legal name, which can change after marriage, for example. 'You may have changed your name but you didn't change it with Social Security,' O'Saben said. 'If the Social Security number doesn't match the first four letters of the last name, the return will be rejected and that will delay processing.' — Search for tax statements if you've opted out of paper mail. Many people like to opt out of snail mail, but paper mail can also include your tax documents. 'If you didn't get anything in the mail doesn't mean that there isn't an information document out there that you need to be aware of and report accordingly,' said O'Saben. — Report all of your income. If you had more than one job in 2022, you need the W-2 forms for each — not just the one from the job you ended the year with, said Christina Wease, interim director of the tax clinic at Michigan State University. What resources are available? For those who make $73,000 or less per year, the IRS offers free guided tax preparation that does the math for you. If you have questions while working on your tax forms, the IRS also offers an interactive tax assistant tool. Beyond TurboTax and H&R Block, taxpayers can also hire licensed professionals, such as certified public accountants. The IRS offers a directory of tax preparers across the United States. The IRS also funds two types of programs that offer free tax help: Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly program (TCE). People who earn $60,000 or less a year, those who have a disability, and those who speak limited English all qualify for the VITA program. Those who are 60 or older qualify for the TCE program. The IRS has a site for locating organizations hosting VITA and TCE clinics. If you have a tax problem, there are clinics around the country that can help you resolve these issues. Generally, these tax clinics also offer services in other languages such as Spanish, Chinese and Vietnamese. The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
Yahoo
15-04-2025
- Business
- Yahoo
How to file for an extension, and other Tax Day advice
NEW YORK (AP) — If you've waited till the last minute to file your taxes, don't panic. You still have time to get it done. And if you're worried that you still might not be able to finish in time, you can file for an extension, which will give you until Oct. 16 to file your return. What do I need to file my tax return? Generally, every tax-filer needs the following at hand — your Social Security number — W-2 forms, if you're employed — 1099-G forms, if you're unemployed — 1099 forms, if you're self-employed — Savings and investment records — A sense of any eligible deductions, such as education expenses, medical bills, charitable donations, etc. — A sense of relevant tax credits, such as the child tax credit, retirement savings contributions credit, etc. To find a more detailed document list, visit the IRS website. Tom O'Saben, director of tax content and government relations at the National Association of Tax Professionals, recommends gathering all your documents in one place before you start your tax return, as well as having your documents from last year if your financial situation has drastically changed. Theresa Grover, site coordinator for the Volunteer Income Tax Assistance (VITA) program at Northeast Wisconsin Technical College, also recommends taxpayers create an identity protection PIN number with the IRS to guard against identity theft. Once you create a number, the IRS will require it to file your tax return. How do I file for an extension? If you run out of time to file your tax return, you can file for an extension to take more time by using your preferred tax software, with the IRS Free File tool, or via mail. However, it's important to remember the extension is only to file your tax return, not to pay owed taxes. If you owe taxes, you should pay an estimated amount before the deadline to avoid paying penalties and interest. If you expect to receive a refund, you'll still receive your money when you file your taxes. The deadline to file for an extension is Tuesday, April 15, which will give you until Oct. 16 to file. How can I avoid mistakes filing my taxes? Many people fear getting in trouble with the IRS if they make a mistake. To avoid common errors: — Double check your name on your Social Security card. When working with clients, O'Saben always asks them to bring their Social Security card to double-check their number and their legal name, which can change after marriage, for example. 'You may have changed your name but you didn't change it with Social Security,' O'Saben said. 'If the Social Security number doesn't match the first four letters of the last name, the return will be rejected and that will delay processing.' — Search for tax statements if you've opted out of paper mail. Many people like to opt out of snail mail, but paper mail can also include your tax documents. 'If you didn't get anything in the mail doesn't mean that there isn't an information document out there that you need to be aware of and report accordingly,' said O'Saben. — Report all of your income. If you had more than one job in 2022, you need the W-2 forms for each — not just the one from the job you ended the year with, said Christina Wease, interim director of the tax clinic at Michigan State University. What resources are available? For those who make $73,000 or less per year, the IRS offers free guided tax preparation that does the math for you. If you have questions while working on your tax forms, the IRS also offers an interactive tax assistant tool. Beyond TurboTax and H&R Block, taxpayers can also hire licensed professionals, such as certified public accountants. The IRS offers a directory of tax preparers across the United States. The IRS also funds two types of programs that offer free tax help: Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly program (TCE). People who earn $60,000 or less a year, those who have a disability, and those who speak limited English all qualify for the VITA program. Those who are 60 or older qualify for the TCE program. The IRS has a site for locating organizations hosting VITA and TCE clinics. If you have a tax problem, there are clinics around the country that can help you resolve these issues. Generally, these tax clinics also offer services in other languages such as Spanish, Chinese and Vietnamese. ____ The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
