California resident J.D. won over $50,000 playing video poker online this year. Wow! She couldn’t do that well in Las Vegas, and at home she can play anytime without having to drive for hours. Plus, she can play any number of different “machines” without waiting for one of them to be free. But J.D. spent over $40,000 before cashing out $50,000. Are her losses deductible?

First, a brief overview.

Online gambling offers advantages to both casual hobbyists and serious gamblers. After all, you never have to sit next to a smoker, you aren’t subject to the casino cacophony, and you can take a break without worrying about someone stealing your machine.

But the legality of online gambling in the U.S. is not really clear. There is no overall federal law that defines illegal gambling. So whether your playing is legal is defined at the state level. Some states — including Illinois, Indiana, Louisiana, South Dakota and Washington — have explicitly outlawed online gambling or some form of it. Other states have no specific law addressing Internet gambling.

You’ve probably heard of the Unlawful Internet Gambling Enforcement Act and Regulation GG which became law in 2006 and become effective on Dec. 1. That certainly sounds like a federal law that makes Internet gambling illegal, doesn’t it?

Ironically, this law turns bankers into policemen and forces them to enforce a non-law. Banks are required to return or block illegal-gambling deposits into their clients’ accounts, or even to close accounts.

However, the UIGEA doesn’t define unlawful Internet gambling. In fact, there is so much dispute over the definition that the House financial services committee wrote to Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke asking them to delay enforcement of the UIGEA for one year, until Dec. 1, 2010. See the letter.

Congress is battling over outlawing online gambling altogether, or limiting it to certain games. At present, the only thing that’s clear is that online sports betting is illegal.

Article in its entirety: Online Gambling Poses Tax Conundrum

With irate property owners clamoring for relief, Illinois lawmakers passed a law in 1991 to cap skyrocketing real estate tax bills.

At the time, no one anticipated that more than 17 years later, the rate of inflation—the key measure used in the legislation to limit tax increases—would be less than 1 percent.

In 2008, the annual bump in the rate was an unprecedented 0.1 percent. That means most taxpayers can expect only slight increases in their 2009 tax bills, which are paid in 2010.

But it also means that many school districts and other government agencies will see only tiny increases in the property-tax revenues they will collect next year. And that has sent shock waves around the state, as school districts scramble to adjust their budgets and plan for cuts as early as next school year.

With tax referendum measures unlikely to succeed in the current recession, suburban districts are moving to eliminate everything from staff to band programs and sports teams as they try to cover teacher salaries and other costs that are going up by far greater than 0.1 percent.

“Property taxes are huge for us. They comprise about 56 percent of our revenue stream,” said Tom Hernandez, director of community relations for Plainfield Community Consolidated School District 202.

The tax cap as a theory works exactly as intended for taxpayers, he said, and municipalities and other home-rule communities can offset the cap through gas taxes and sales taxes.

“But we can’t do that,” he said. “We are limited to the rate of inflation and we are now taking a big hit from it.”

John Reiniche, assistant superintendent for business services at Orland School District 135, said his district and others have been closely watching the Consumer Price Index. While there have been no cutbacks in District 135 in personnel or programs as a direct result of the economy and tax cap, the situation will be front and center in setting a tentative budget by June.

“That will definitely be a point of conversation with our board coming down the road in 2010,” he said.

Most districts rely on local property taxes to cover the majority of their budgets and don’t anticipate the state coming to the rescue. The state already is behind on sending money to districts for special education, transportation and other costs.

The unease has reached Springfield, where lawmakers have begun filing legislation to change the so-called tax-cap law and provide relief for school budgets.

Taxpayer advocates are wary of any changes.

An expert Chicago Tax Attorney is only a click away.

The city of Nashua has had it’s tax rate increased by less than 1 percent, the mayor announced Wednesday, and one alderman said it couldn’t have come at a better time.

“This is one of our smallest increases over the last 10 years,” Mayor Donnalee Lozeau said. “I hope this provides some comfort for our residents in these uncertain times.”

Lozeau announced the tax rate during her remarks at the beginning of the board of aldermen’s meeting. The state Department of Revenue Administration sets the tax rate based on financial information provided by the city.

The new rate is $17.55 per $1,000 of assessed property value. It marks an increase of 15 cents, or 0.8 percent, over the current tax rate.

With the new rate, the owner of a home assessed at $250,000 would pay $4,387.50 in city property taxes this fiscal year, or $37.50 more than last year.
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Make sure to get your maximum refund. Why should the IRS get to keep a penny of your money?

For 2007, you got to take off as much as $3,400 from your income for each qualified exemption you have, up from $3,300 in 2006. (The level rises to $3,500 in 2008.) Despite myths to the contrary, these include children who are full-time students under age 24, regardless of how much income they may have. As your income increases, your exemption deduction may decrease. For 2007, on a joint return, your exemption deduction were phased out between adjusted gross income of $234,600 and $357,100.

For singles, the numbers are between $156,400 and $278,900. With the exemption rising in 2008, the phaseouts increase as well.

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KPMG, a well-known international accounting firm, released its annual survey of corporate and indirect tax rates for 2008, showing that the U.S. corporate income tax rate was higher than all other global regions, 14.1 percentage points higher than the global average and nearly 17 percentage points higher than the average among European Union nations.

In Tax Foundation Fiscal Fact No. 145, “KPMG Study Finds U.S. Corporate Tax Rate Higher Than Every Global Region,” Tax Foundation President Scott Hodge explains that America’s stagnant business tax system is potentially harmful to America’s economic competitiveness in the global marketplace.

“Of the 106 countries surveyed, only the United Arab Emirates (55 percent), Kuwait (55 percent), and Japan (40.69 percent) impose a higher corporate tax rate than the combined rate of 40 percent in the U.S.,” says Hodge. “What this says about America’s tax competitiveness is not good.”
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