Cruise lines, Las Vegas Strip gamblers get good IRS news
The agency never sends you a letter saying "thanks for paying your taxes," and it rarely has an IRS agent check in on a business owner to see how his vacation was.
More often, when an IRS letter shows up in your mailbox, it's a heart-stopping moment. At its best, dealing with the agency is a hassle. Filing your taxes takes some effort and the IRS has endless power to question your deductions, income and anything else.
Casino gamblers, however, have a special beef with the IRS. Gambling wins are treated as income. As a practical matter, however, most people do not track their small wins and losses.
Players who use loyalty cards to track their play can get a win/loss statement at year's end and they can deduct their losses from any wins.
The biggest complaint, however, comes as a result of what gamblers call a hand pay, a win of $1,200 or more on a slot machine.
When that happens, the machine you are playing freezes and you have to wait for an attendant. That can often take a long time as casinos - whether you're on the Las Vegas Strip, in a regional casino, or on a cruise ship that sails from a U.S. port - don't seem to have personnel scouring the floor for the light that goes on.
It's a frustrating process: You have to sit at your machine to wait for an attendant who collects your driver's license and then brings you a W-2G, the IRS form that tells the agency about your win and forces you to report the winnings.
If you're lucky enough to hit multiple hand pays on the same day (or on the same cruise), the process happens a little faster the second time, but the process makes scoring a big win frustrating.
Want the latest cruise news and deals? Sign up for the Come Cruise With Me newsletter.
Many casino gamblers, both on land and at sea, complain about the process specifically because the $1,200 limit has been in place since 1977. That's 46 years with no increases, which puts that number well out of whack with inflation.
Casinos don't like this rule because they have to devote labor to completing the forms. Players don't like it because they have to stay at their machines but can't play, hoping to get the attention of a casino worker,
All land-based casinos follow the rules, while nearly every cruise line sailing from U.S. ports does. MSC Cruises, a growing rival to Royal Caribbean and Carnival, does not opt into the program. In theory, any casino wins on an MSC ship are still taxable, but in practice it seems unlikely that anyone would report their winnings without a W2G being filed.
The IRS Advisory Council, however, has recommended that the W2G threshold increase to $5,800. IRS Commissioner Danny Werfel appeared to back such a move during a recent appearance in Congress.
"I think it's very valuable when we get input from the taxpaying community and our Advisory Council on when thresholds may be out of date," Werfel said, according to Casino.org. "The determination of something like that is of regulatory nature and therefore the decision rests with the Treasury's Office."
The change has been championed by U.S. Reps. Dina Titus (D-Nevada) and Guy Reschenthaler (R-Pennsylvania). They note that the purchasing power of $1,200 today equals $6.200.
Sign up for the Come Cruise With Me newsletter to save money on your next (or your first) cruise.
"Because the threshold has not kept up with inflation, it has resulted in a drastic increase in reportable jackpots, which trigger tax burdens for winners and compliance burdens for casinos," explained Reschenthaler.
"Increasing the threshold will eliminate this onerous red tape, ensuring the gaming industry can continue to support good-paying jobs, and foster economic growth in Pennsylvania and across the country."
Copyright 2025 The Arena Group, Inc. All Rights Reserved
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
9 hours ago
- Yahoo
9 Secret Strategies the Wealthy Use To Cut Their Tax Bills, According to Preston Seo
If you feel like you're paying way too much in taxes, you're not alone. Even financial pros like Preston Seo, host of 'The Legacy Investing Show,' have ended up owing more than they would have liked. Learn More: Read Next: In a recent YouTube video, Seo shared that he once owed over $30,000 in taxes on top of his W-2 withholdings. But that all changed when he learned how to work within the U.S. tax code to keep more of his income. 'Now my tax bill looks completely different — not because I make less, I actually make more — but because I learned how to legally use the system the way that it was written,' Seo said. Here are nine IRS-approved strategies the wealthy use to pay less in taxes, that you can start using, too. 1. Max Out Your Health Savings Account If you have a high-deductible health plan, you likely qualify for a health savings account (HSA) — and you should be taking advantage of it. 'Most people don't realize how powerful these are,' Seo said. 'You get a tax deduction going in, tax-free growth and also tax-free withdrawals for qualified medical expenses.' To get the full tax benefits, Seo contributes the maximum amount to his HSA every year, but he doesn't use the account to pay his medical bills. 'I pay those out-of-pocket and keep the receipts,' he said. 'That lets my HSA compound untouched, and years from now, I'll be able to reimburse myself, tax-free, with decades of growth on top. It's like a hidden retirement account, only better.' Find Out: 2. Use a Backdoor Roth IRA To Grow Tax-Free Wealth A backdoor Roth IRA is a strategy that allows high-income earners to contribute to a Roth IRA, even if their income exceeds the IRS limits for direct contributions. (For 2025, single filers must have an income of less than $150,000 and joint filers must make less than $236,000 to make a full contribution to a Roth IRA.) To use this strategy, contribute money to a traditional IRA, and then convert it into a Roth IRA. 'Every single year, I max out [my IRA contributions], convert them, and now I have money growing completely tax-free,' Seo said. 3. Open a Solo 401(k) A Solo 401(k) is a retirement savings plan that can be utilized by self-employed individuals or business owners with no full-time employees. You may qualify for this type of account and not even realize it. 'Let's say you have freelance income from consulting, Airbnb or even selling things online — you may qualify for a Solo 401(k),' Seo said. 'I use mine through one of my LLCs, and it's a great way to reduce tax on side income while also building wealth.' 4. Save on Self-Employment Taxes With an S Corp Election If you're currently registered an LLC, you should consider filing for S Corp status to enjoy the tax benefits that come with it. To qualify, you must own a business that makes $50,000 or more in profit. 'This move could be a game changer,' Seo said. 'When you elect S Corp status, you pay yourself a salary and you take the rest of your income as distributions, which aren't subject to self-employment tax.' With the help of his accountant, Seo filed for S Corp status as soon as his business crossed the profit threshold. 'The first year alone, that saved me nearly $20,000 in taxes,' he said. 5. Claim the Home Office Deduction If you are self-employed and have an area of your home that you exclusively use for business, you can deduct a portion of your housing costs, including your mortgage or rent, utilities and even home repairs. 'I use it [for a] 300-square-foot room in my house,' Seo said. 'It's about 6.25% of the house, and that means I can write off over $7,000 per year just for working where I already live. I just keep the documentation, like photos and floor plans, in case I ever get asked.' 6. Hire Your Children To Shift Income Tax-Free If you have children and you have your own business, you can legally hire your kids to work for you. Seo pays his son to help him with content and perform other administrative tasks. 'The key here is the work must be real, age-appropriate and documented,' he said. 'We track the hours, use time sheets and keep everything above board. Since he earns under the standard deduction threshold, he pays no income tax. I get the deduction, and he learns real financial responsibility. It's a great way to shift income into a 0% bracket, and also build wealth inside your family legally.' 7. Use the Augusta Rule To Rent Your Home Tax-Free The Augusta Rule is an IRS rule that allows homeowners to rent out their home for up to 14 days per year tax-free. Seo recommends renting your home to your business. 'If you have any strategy sessions, filming days or internal retreats, you can use your home and have your business pay you,' Seo said. 'I do this several times a year. I receive income without paying a dime of tax on it.' 8. Take Advantage of the Short-Term Rental Loophole If you own a rental property, you'll want to take advantage of this tax break. 'Real estate is one of the few areas of the tax code where the government practically rewards you with deductions,' Seo said. 'If you do own or plan to buy a short-term rental and manage it actively, you can use appreciation losses to offset your other active income, and this is a big deal.' Seo owns several short-term rentals. He keeps guest stays under seven days and puts in over 500 hours per year managing them. 'That lets me treat the income as active, meaning I can use cost segregation and also bonus depreciation to reduce taxes on my other businesses,' he said. 'One year, I wiped out over $50,000 in taxable income using the strategy.' 9. Use a 1031 Exchange To Defer Capital Gains Taxes A 1031 exchange is a tax-deferral strategy that allows a real estate investor to sell one investment property and reinvest the proceeds into another 'like-kind' property without immediately paying capital gains taxes on the profit from the sale. 'That means you defer the tax bill, and you get to reinvest all of your profit,' Seo said. 'I used this when I sold two four-plexes. I rolled the equity into a 24-unit commercial building and paid no tax on the gains. That single move preserved hundreds of thousands of dollars.' More From GOBankingRates Mark Cuban Warns of 'Red Rural Recession' -- 4 States That Could Get Hit Hard Warren Buffett: 10 Things Poor People Waste Money On 5 Types of Cars Retirees Should Stay Away From Buying This article originally appeared on 9 Secret Strategies the Wealthy Use To Cut Their Tax Bills, According to Preston Seo
Newsweek
a day ago
- Newsweek
Major IRS Changes Coming for Business Tax Audits in 2025
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. The Internal Revenue Service (IRS) announced new guidance on Friday aimed at dramatically reducing examination times for corporate taxpayers while making the audit process more collaborative and efficient. The Interim Guidance Memorandum introduces sweeping changes to how the IRS conducts business tax examinations, with implementation beginning in 2025 and extending through 2026. Why It Matters These changes could fundamentally alter how corporations experience tax audits, potentially saving businesses significant time and resources during examination periods. The reforms target long-standing inefficiencies that have plagued the corporate tax examination process, with some procedures taking years to complete under current protocols. For large corporations, the expanded settlement options and streamlined processes could provide greater tax certainty and allow for more predictable business planning. The changes also signal the IRS's recognition that its traditional examination methods may have been counterproductive to both tax collection efficiency and taxpayer compliance. What To Know The memorandum, titled "Reinforcing the Customer Focused, High Efficiency Large Business & International Examination Process," represents a significant shift toward what the IRS calls a "culture of collaboration" with taxpayers to resolve tax issues more quickly. These audit process changes come amid a broader series of IRS updates for the 2025 tax year that have affected individual taxpayers, including increased child tax credits, revised 1099-K reporting thresholds, and inflation-adjusted tax brackets and standard deductions. While those changes primarily impacted individual filers, the July announcement specifically targets business tax examinations. The new guidance introduces three major procedural changes that will reshape corporate tax examinations: Elimination of Acknowledgement of Facts Process: The IRS will phase out its Acknowledgement of Facts (AOF) Information Document Request process by 2026, citing "limited value and extended timelines." Until December 31, 2025, taxpayers can choose whether to participate in AOF procedures. This transition period allows for stakeholder feedback before permanent implementation. Expanded Accelerated Issue Resolution: The memo clarifies that Accelerated Issue Resolution (AIR) now applies to Large Corporate Cases, previously handled under the Coordinated Examination Program. AIR closing agreements allow resolved issues to apply across all filed return years within the current audit cycle, potentially resolving multiple years of potential disputes simultaneously. Enhanced Fast Track Settlement Reviews: The IRS will implement stronger internal review processes before denying taxpayer requests for Fast Track Settlement (FTS). Additional approvals are now required, supporting broader use of this expedited resolution process. What People Are Saying The Internal Revenue Service wrote in the announcement: "These changes are intended to enhance taxpayer service and tax administration by streamlining examination resources, facilitating timely issue resolution, and expediting tax certainty." FILE - A sign outside the Internal Revenue Service building is photographed May 4, 2021, in Washington. FILE - A sign outside the Internal Revenue Service building is photographed May 4, 2021, in Washington. AP Photo/Patrick Semansky, File What Happens Next The changes will roll out gradually over the next two years, with the AOF phase-out extending through 2025 and full implementation expected by 2026.
Yahoo
a day ago
- Yahoo
Don't Need Your Required Minimum Distribution (RMD) Right Now? What Can You Do With the Cash Influx?
Key Points The IRS eventually comes looking for the tax revenue it didn't get to collect earlier on the money invested within IRAs and other tax-deferred accounts. Just because you withdraw money from a tax-sheltered retirement account doesn't mean it can't continue providing value, or continue growing. There's a financial maneuver that can help negate your need to make future RMDs. The $23,760 Social Security bonus most retirees completely overlook › Are you going to be 73 years old (or older) at any point in 2025? If so, whether or not you need it -- or even want it -- you will be legally required to start taking money out of most types of tax-deferred retirement accounts you may own. These withdrawals are called required minimum distributions, in fact, or RMDs -- and failing to make those taxable withdrawals each year before the annual deadline can result in decent-sized penalties. Don't stress out if you just don't need this cash at this time, though. While you can't refuse to withdraw it, you can still do constructive things with it outside of your IRA. Here's a review of your four best options. But first things first. What's an RMD? If you've already been through your first required minimum distribution, then 2025's RMD isn't your first rodeo. If you're unfamiliar with them, though, here's the deal. All the money that's been growing tax-free inside your (non-Roth) IRA, 401(k), or similar account? The IRS eventually wants its cut. The federal government's revenue-collection arm figures that 73 years of age is about as late in life as it wants to let you keep this money completely untaxed. And once you start, you'll take these required minimum distributions every year for the rest of your life. But what's the minimum? It varies with your age. When you're 73, you'll only need to withdraw about 3.77% of your retirement account's value as of the end of the prior year. The proportion gets progressively larger as you age, though, reaching 50% of the prior year's closing value at the rarely seen age of 120. Your brokerage firm or your account's custodian will supply you with the information needed to determine your RMD, and in many cases can figure it out for you. Otherwise, refer to the IRS for instructions. If you own more than one retirement account, that's OK. You can mix and match your withdrawals from the same kinds of retirement accounts to come up with a sum-total RMD figure, and then make the withdrawal from just one of these accounts, or portions from each. The IRS only cares about the total amount it's owed -- not where the money comes from. However, you can't mix and match among different kinds of retirement accounts, like a 403(b) and a traditional IRA. Both of them do have RMDs, but you'll have to handle each category separately. You can only combine like-categorized retirement accounts for RMD calculation and withdrawal purposes. There's one exception to this: 401(k) accounts. If you happen to have more than one 401(k), you need to take your calculated RMD for each one from that one. As for timing, your very first required minimum distribution doesn't need to be completed until April 1 of the year after you turn 73. Past that point, these withdrawals are supposed to be completed by the end of the calendar tax year. That means if you wait to make your first one, you may end up taking two years' worth of RMDs in the year you turn 74. Options Suppose you don't actually need all of that money in that year, though. No problem. While you'll still need to make these withdrawals, there are several options for what you may want to do with the cash influx, some of them specific to IRAs. 1. Give it away (tax efficiently) You can always give money to charitable causes. And, while there are limits, donations to legitimate charities are at least somewhat tax-deductible. If you're over 70 and a half and are willing to transfer cash or assets directly from your IRA to a charity, though, tax-deductibility limits are much higher. Specifically, by categorizing your RMD as a qualified charitable distribution (or QCD), you can take as much as $108,000 worth of an IRA distribution that would have been considered your taxable income (or up to $216,00 for a married couple) and directly transfer it to a charitable cause -- and that maneuver will still satisfy your minimum distribution requirement. You can't do this with 401(k)s or similar accounts. Contact the charity in question for instructions on how they can receive this gift, and then confirm it for your record-keeping and documentation purposes. 2. Tuck it away for a rainy day Just because you don't need this money right now doesn't necessarily mean you want to get rid of it altogether, of course. The day may well come when you do need it. If that's the case, leaving a sizable wad of cash in a checking or savings account is an option, but arguably not your best one. These accounts pay little to no interest. If you're willing to make a minimal amount of effort to shop around, you can find a high-yield money market fund you like instead. Such accounts are currently paying in the ballpark of 4%, and almost all brokerage firms and most online banks offer them. Now, moving money into and out of such funds involves buying and selling just like an ordinary mutual fund. So, to convert that money back to something liquid and cash-like will take one full business day. It's certainly worth the trouble, though, for a good interest rate on the kind of money you're likely to be reallocating with an RMD. 3. Invest it -- or reinvest it -- with its new taxable status in mind Most people slated to collect a required minimum distribution who don't actually need the money at that time are likely just going to reinvest it. However, if you're only going to repurchase the same investments you sold to facilitate the RMD, you need not bother. You can simply request a transfer of assets from an IRA and into an ordinary brokerage account. Just instruct your broker/custodian to do what's called an in-kind transfer. It may take an extra day or two to complete, but you'll still get a precise distribution value figure for the day the transfer was officially done. That being said, while you're moving things around anyway, you might want to use the opportunity to make some smart changes to your portfolio. Just consider the new taxable status for any freed-up money or assets. Nothing that ever happened within your IRA was a taxable event. Now, everything this money could become presents a potential tax liability. If you want to keep your tax bill to a minimum, you probably won't want to invest your entire RMD in dividend stocks. While they're riskier, buy-and-hold growth stocks are also rather tax-efficient. 4. Start saving for a Roth conversion Finally, if you know taking taxable withdrawals out of your retirement account every year is going to be more of a drag than you care to deal with, you've always got the option of converting an ordinary IRA into a Roth IRA -- Roths aren't subject to RMDs. The downside to this move is that when you convert money from an ordinary IRA into a Roth, all the taxes on this withdrawal come due at once. This can get expensive, especially if doing so bumps you into a higher tax bracket for the year. That's why many people who opt for Roth conversions perform them over the course of multiple years, completing the conversion in tranches, each of which is a relatively small income-taxable event. Assuming you'd rather not leave any money out of the newly converted (but still tax-deferring) Roth when you don't have to, you can cover this tax bill with other funds ... including your RMD money. Just bear in mind that a Roth conversion doesn't satisfy your RMD for that year. And, paying taxes on one doesn't negate the tax bill for the other. Every year's required minimum distribution is already determined at the end of the prior year, and is owed whether you do a conversion that year or not. If you like this idea, you'll simply want to convert as much money as possible as quickly as possible to keep your RMDs -- and the number of years you must take them -- to their lowest-possible minimum. The $23,760 Social Security bonus most retirees completely overlook If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known could help ensure a boost in your retirement income. One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these Motley Fool has a disclosure policy. Don't Need Your Required Minimum Distribution (RMD) Right Now? What Can You Do With the Cash Influx? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
