President Trump released his tax “plan.” That’s an overstatement; the plan is really an outline. Gone would be the Alternative Minimum Tax, the Estate Tax, and most itemized deductions; there would be three tax brackets with the top tax bracket at 35%; the corporate tax rate would fall from 35% to 15%; and the top capital gain tax rate would be 20%.
The outline is one page, and is more a statement of goals than anything else. There are definite issues that I have with it in my area of expertise: gambling. And overall the results wouldn’t be good for most gamblers.
For professional gamblers, there would be no direct changes. Professional gamblers report their income on a Schedule C; there’s no change here. However, amateur gamblers could be devastated by the proposal. Consider an amateur gambler who correctly reports his $100,000 of winning sessions and $80,000 of losing sessions. Under current tax law, he pays tax on $20,000 of net winnings (his gambling losses are an itemized deduction on Schedule A). Under President Trump’s plan, he would pay tax on $100,000 of winning sessions; his gambling losses wouldn’t be deductible. This would have a devastating tax impact on gambling.
There is an easy fix for this, and it comes from a state not known for having a good tax system—New Jersey. Add in a Schedule G for gambling, where gambling wins and losses for an amateur gambler would be listed; the net would flow to Other Income where it would be taxed.
The final result of tax reform won’t be known for months, and it’s probable what emerges from Congress won’t look anything like what’s been proposed.
Tags: TrumpTaxReform
Nice! That is telling it like it is. I have drastically reduced my gambling this year, but still have some decent jackpots. I’ll stop for the rest of the year just in case the Tax Deformity (er, Tax Reform) plan gets passed. This horrible proposal will also devastate the Housing industry. If this passes without a special provision for gamblers, ouch!!!!!!!!!! I will not be gambling much.