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Yahoo
8 hours ago
- Yahoo
I'm a Wealth Advisor: 4 Ways Trump's Bill Is Reshaping My Clients' Plans
President Donald Trump's 'One Big Beautiful Bill,' signed into law on July 4, introduces sweeping tax changes that could significantly impact your financial strategy. From bonus depreciation to estate planning, the bill revives and expands many provisions from the 2017 Tax Cuts and Jobs Act — and adds new ones. Find Out: Read Next: GOBankingRates spoke with Rob Edwards, managing director and senior PIM portfolio manager at Edwards Asset Management, to learn how he's helping clients adapt to the new landscape. 1. Adjusting Portfolios for Inflation and High Interest Rates With more government spending and bigger deficits on the table, we're not expecting inflation — and therefore interest rates — to come down anytime soon. We're shifting toward investments that can protect against inflation. Our goal is to support portfolio growth and help preserve purchasing power, so our clients won't need to make lifestyle cuts. Learn More: 2. Using 100% Bonus Depreciation To Maximize Tax Savings Bonus depreciation is back at 100%. This is a major tax break for our business owners and real estate-focused clients who are considering making capital improvements or big-ticket purchases. We're working with these clients and their tax professionals to evaluate whether accelerating some investments makes sense from a tax and cash flow perspective. 3. Making the Most of the Increased SALT Deduction Cap The state and local tax (SALT) deduction cap is temporarily rising from $10,000 to $40,000 in 2025. That creates some short-term relief for clients in high-tax states, but it comes with income limitations and it's not permanent. Still, Florida remains one of the few states that does not impose a state income tax. So, we're helping clients claim Florida residency the right way — legally, efficiently and with a clear view of the long-term financial impact. 4. Rethinking Estate Plans Under the New $30M Exemption Rule The One Big Beautiful Bill increased the federal estate and gift tax exemption to $30 million for married couples and will now adjust with inflation. This is a big one for the ultra-high-net-worth client. It doesn't mean it won't change again someday, but for the uber wealthy, it removes a lot of uncertainty about what could happen to their significant wealth — at least for a few years. More From GOBankingRates 6 Big Shakeups Coming to Social Security in 2025 This article originally appeared on I'm a Wealth Advisor: 4 Ways Trump's Bill Is Reshaping My Clients' Plans Sign in to access your portfolio
Yahoo
10 hours ago
- Yahoo
If you're a fan of sports betting or casino gambling, you won't be a fan of the new tax law
The house always wins in gambling, and soon it could feel like Uncle Sam does too. That's because gamblers face what amounts to a tax hike beginning in 2026: They'll no longer be able to deduct the full amount of their wagering losses. New rules included in the massive tax bill that was signed into law in July will reduce the tax deduction gamblers can claim on their losses, from 100 percent to 90 percent, starting next year. Consider this: If a gambler wins $20,000 and loses $20,000 in the same year, this change in tax law affects how much of those losses they can deduct: In tax year 2025, before the new rule, the taxpayer can deduct the full $20,000 in losses. In tax year 2026 and beyond, the taxpayer can only deduct 90 percent of their losses, or $18,000. Even though that gambler broke even, the change in tax law will increase their taxable income by $2,000 — an amount that could potentially push the taxpayer into a higher income tax bracket. Of course, the higher stakes the gambler, the more significant the tax hike will be. But gamblers may have luck on their side: Less than one month after President Donald Trump signed the bill into law, Republicans and Democrats drafted legislation to undo this tax change. 'There is enough concern that there is a reasonable chance that this provision will be undone before it goes into effect,' says Kasey Pittman, managing director of tax services at Cherry Bekaert, an accounting and advisory firm. That said, taxpayers shouldn't bet the house that this recent tax change will be reversed and should instead prepare for their betting income to receive a different tax treatment starting next year. Here's what you need to know. What is the new tax rule on gambling losses? Among the many tax-related changes included in the massive 'One Big Beautiful Bill' was a short provision outlining the 'extension and modification of limitation on wagering losses.' The changes are a bigger deal to gamblers than the brief amount of text might suggest. Beginning in 2026, you can only claim a deduction equal to 90 percent of your wagering losses. That will mark a change from current tax law, which allows gamblers to deduct 100 percent of losses. What won't change is that the amount of losses you are able to deduct can't exceed the amount of your gains. Reducing the amount of claimable losses from 100 percent to 90 percent is 'detrimental' to gamblers, says Andrew L. Gradman, founder of the Law Office of Andrew L. Gradman, APC. It's notable that Republican lawmakers are already trying to repeal this tax law change, which shows how broadly unpopular it is, he says. 'It's pure cruelty to gamblers,' Gradman says. How to report gambling gains and losses The tax rules for casual gamblers were already rather complex, with rules that apply to winnings from lotteries, raffles, horse races, casinos, online betting, cash winnings and the fair market value of prizes. The amount of reportable winnings depends on how you won the money, with the amount varying whether you won big at a slot machine or in a poker tournament, for example. (Here's the IRS page on gambling income and losses.) If your gambling earnings meet certain thresholds, a payer is required to issue you a Form W-2G for those winnings that are subject to federal income tax withholding. That said, you're required to report all gambling winnings, even those that didn't necessitate a tax form. But gambling losses are treated differently. Taxpayers can only deduct gambling losses if they itemize their deductions and keep a record of winnings and losses. What's more, the amount of losses you deduct can't be more than the amount of gambling income you reported. That means that even if you're a net loser for the year, you can only claim losses up to the amount of your winnings. Gambling losses: Standard vs. itemized deductions When sitting down at a blackjack table, you might not think about your income taxes. But whether you take the standard deduction or itemize your deductions actually makes a big difference, since you can only deduct your losses if you itemize. And the massive new tax bill made permanent the much larger standard deduction created under the Tax Cuts and Jobs Act of 2017, and added an extra inflation boost for 2025. Thus, the standard deduction for 2025 is: $15,750 for single filers and those married filing separately $23,625 for head of household filers $31,500 for married filing jointly filers Learn more: Standard deduction vs. itemized deduction: Pros, cons and how to decide With the larger standard deduction now permanent, that puts many gamblers in a predicament. For the vast majority of taxpayers, it will make more sense to take the standard deduction. But you can only deduct gambling losses if you itemize deductions, meaning that casual gamblers who take the standard deduction get 'the worst treatment' tax-wise, Gradman says. Even though gambling income is included in their gross income, casual gamblers who take the standard deduction can't claim losses, Gradman says. 'The IRS has these folks in a ratchet: Wins are taxable, but losses don't mitigate those taxes,' he says. In fact, the tax law discourages gamblers who take the standard deduction from tracking their losses because there's no benefit, Gradman says. Whether or not it makes sense for a taxpayer to itemize their deductions will depend on many factors beyond wagering gains and losses, Pittman notes. And the new tax bill may encourage some taxpayers to itemize, thanks to a temporary boost in the SALT (state and local taxes) deduction limit to $40,000, from $10,000 previously. Because of the various nuances of tax law, casual gamblers who are lower-income are already far more likely to claim the standard deduction and will continue to miss out on the opportunity to claim their losses, Pittman says. The tax law for gambling gains and losses was already difficult to navigate for tax efficiency of deductions, she adds. 'Now it's become more difficult beginning in 2026,' she says. Meanwhile, casual gamblers who itemize their deductions are in a better position tax-wise, Gradman notes, but they still lose out with the change in tax law that reduces the amount of losses they can claim. Because gamblers will be limited to claiming only 90 percent of the amount of their losses and only up to the total amount of their gains, that will increase their taxable income, Pittman adds. How to manage gambling winnings and losses with the tax changes As evidenced by the outcry to this provision in the tax bill, there's reason for gamblers to be optimistic that what amounts to a tax hike on winnings could be rolled back before it takes effect in January. But passing legislation to undo prior legislation isn't as easy as it might seem, Pittman cautions. 'Those who may be affected by this legislation should be hopeful, but it's certainly not something they should count on as a certainty,' Pittman says. Whether the intention behind the provision was to discourage gambling or to generate revenue — or a mix of both — is difficult to ascertain, but the nonpartisan Congressional Budget Office has estimated it will raise more than $1.1 billion over the course of a decade. Gamblers should keep an eye on developments heading into 2026, while there are ways to be tax savvy when at the casino or beyond. For casual gamblers who take the standard deduction, Gradman advises the following steps: Group gambling activities into 'sessions,' which could be one day at the casino. Net wins against losses within each session so you're left with net-income or net-loss sessions. Add up the net-income sessions and report this amount for your gambling winnings on Form 1040, Schedule 1. Ignore the net-loss sessions as they don't provide any benefit. Casual gamblers who itemize their deductions should take the same steps 1-3 as above, Gradman says, with the following additional steps: Add up the net-loss sessions, and report the amount of this loss as 'other itemized deductions' on Form 1040, Schedule A. Only include total losses up to total income from income sessions. And if you are the type of person who thinks about tax efficiencies while gambling, tax law may be a factor to consider when deciding whether to hold 'em or fold 'em at the table. That's because there are some 'perverse' incentives to continue playing and 'throw good money after bad,' Gradman says. Finally, many gamblers rely on casinos to report the amount of their winnings to the IRS. While the new law reduces the value of losses and may make taxpayers even less motivated to keep records, there can be benefits to doing so, he adds. 擷取數據時發生錯誤 登入存取你的投資組合 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤
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Miami Herald
a day ago
- Miami Herald
Free tax filing program could soon be axed by the IRS. Here's what to know
The Internal Revenue Service is poised to discontinue its Direct File program, which allows millions of Americans to file their taxes for free, drawing criticism from some Democrats. During a tax summit on July 28, IRS Commissioner Billy Long said the cost-free service is 'gone,' according to Bloomberg Tax. 'Big beautiful Billy wiped that out,' he added, referencing the sweeping congressional spending bill signed into law by President Donald Trump on July 4. The bill does not outright end Direct File, but it allocated $15 million to the Treasury Department to establish a task force to review the program and assess other options. An IRS spokesperson confirmed the agency is awaiting the task force's findings, which must be delivered to Congress within 90 days. 'We look forward to Treasury's forthcoming report to Congress on the Direct File program and on potential public-private partnership alternatives to Direct File, as required by the One Big Beautiful Bill,' the spokesperson said in a statement to McClatchy News. 'Long is committed to modernizing the IRS and providing a taxpayer experience that meets today's expectations, which includes giving taxpayers transparency into the status of their tax returns and audits,' the statement said. The Direct File program allows eligible taxpayers in certain states to electronically file their federal tax returns directly on the IRS website at no cost. The agency launched the pilot program in 2024, under then-President Joe Biden, making it available to taxpayers in 13 states. It was later expanded to include 25 states, including California, New York, Florida, Texas, Illinois, North Carolina and Pennsylvania. Residents of these 25 states reporting W-2 wage income, Social Security income, retirement income, and other credits and deductions are able to use the free service. But, taxpayers with business, rental or gig economy income are ineligible. The IRS website has a brief survey, allowing taxpayers to determine whether they are eligible. The Treasury Department said in October that more than 30 million Americans would be eligible to use the service during the 2025 tax season. Many Republicans have expressed criticism of the Direct File program, arguing it poses a number of problems. 'The program's creation and ongoing expansion pose a threat to taxpayers' freedom from government overreach,' a group of 29 House Republicans said in a December letter to Trump. They argued that the IRS faces a conflict of interest in preparing tax returns because it simultaneously acts as the tax collector and enforcer. The agency 'has little incentive to ensure hardworking Americans do not pay more than they owe in taxes and may instead benefit from families and small businesses paying greater amounts than they are required by law,' the letter said. Sen. Mike Crapo, an Idaho Republican, has also said it's unclear whether the program is legal without congressional approval. Democrats, on the other hand, have long defended the pilot program, contending it saves taxpayers time and money. In a January letter to Treasury Secretary Scott Bessent, then a nominee for the role, dozens of Democratic senators and representatives lauded the successes of Direct File. They said it had saved $5.6 million in tax preparation fees in its first year and was on track to save $11 billion per year 'at scale.' Since reports of the IRS' plan to axe the program emerged, several Democrats have expressed their disapproval. 'Direct File was an easy way for Americans to file their taxes for FREE each year,' Sen. Elizabeth Warren, a Massachusetts Democrat, wrote on X. 'It's a no-brainer — and it's popular. So why in the world did the Trump administration kill it?' she added. 'To give a huge handout to giant tax prep companies like TurboTax that rip Americans off.'
