New unearned income tax

[Jean]

http://www.taxabletalk.com/2010/03/18/unearned-income-tax-in-new-healthcare-bill-will-impact-gambling/

Marissa, my co-author of Tax Help for Gamblers and an enrolled agent, says that the above explanation is “wrong for now.” We need to wait until the final regulations come out in December. She answered this question on Twitter. (@taxpro4gamblers) You may ask other tax questions there.

···

------------------------------------------
Jean $¢ott, Frugal Gambler
http://queenofcomps.com/
You can read my blog at
http://jscott.lvablog.com/

-----Original Message-----
From: mailto:vpFREE%40yahoogroups.com [mailto:mailto:vpFREE%40yahoogroups.com] On Behalf Of
sulbimenfg311
Sent: Monday, September 17, 2012 9:46 PM
To: mailto:vpFREE%40yahoogroups.com
Subject: [vpFREE] New unearned income tax

In 2013 a 3.8% unearned income tax goes into effect for taxpayers with MAGI
over $200,000 if single and $250,000 if married. Gambling income BEFORE
deductions for losses counts as unearned income. As someone who plays mostly
$10 machines I guess I'll have to move way down in stakes, file as a pro, or
give up VP. Since a large percentage of my income comes from other sources,
not sure filing as a pro is an option. Just wondering how everyone who plays
stakes high enough to be impacted by the new law is planning on handling
this..

Taken from
http://www.taxabletalk.com/2010/03/18/unearned-income-tax-in-new-healthcare-
bill-will-impact-gambling/

"The new healthcare legislation contains plenty of taxes. One especially bad
one is a new 3.8% tax on unearned income above $200,000. This will have a
very bad impact on amateur gamblers.

When I last looked at the bill, the tax was 2.9%. In the "final" version of
the bill, it's up to 3.8%. Let's take a hypothetical gambler, Joe Student.
Mr. Student has $500,000 of winning sessions and $495,000 of losing
sessions. After his standard deduction and exemption he owes no tax.

But not in the near future. He'll owe 3.8% on $300,000 of mostly phantom
income, or $11,400. What will Joe Student do? He'll cheat on his taxes, of
course. Pay $6,400 more than what he made on his income-you must be kidding!
But that's exactly what the legislation dictates."

------------------------------------
From: Cogno Scienti
Sent: Monday, September 17, 2012 10:21 PM
To: vpFREE@yahoogroups.com
Subject: RE: [vpFREE] New unearned income tax
I've been following this since it started. While we won't know for sure
until the IRS actually spells it out, all of the articles I've read other
than the one you quoted from Russ Fox say that the tax is only on net
investment income, which probably does not include gambling winnings.
However, in the same way that boosting your AGI already costs you more in
phased-out deductions, it will also mean that the 3.8% tax will apply to
more or all of your investment income.

Filing as a pro may actually cost you more if you don't have huge investment
income, since there is self-employment tax and an increased Medicare tax.

I'm watching this closely in case Russ is right and gambling winnings are
subject to the 3.8% tax, but so far all the other authorities I've read
don't mention gambling winnings.

Cogno

[Non-text portions of this message have been removed]

[MHS3]

The law as it stands now is clear. And there not much of any indication that Congress is about to change it, except possibly to increase the rate substantially in view of the deficits projected by the CBO:

"Medicare Tax and the Unearned Income Medicare Contribution Tax
2.9% Medicare tax will be expanded to 3.8% for some taxpayers starting 2013
By William Perez, About.com Guide Updated June 29, 2010

The United States government imposes a Medicare tax of 2.9% on wages received by an employee and on business or farming income earned by self-employed individuals. Starting in the year 2013, Medicare taxes will be increased to 3.8% and expanded to cover both wage income and investment income for higher-income individuals. Medicare taxes are imposed at a flat tax rate of 2.9% on wages, salaries, and business or farming income earned by self-employed individuals. There's no limit on the amount wages subject to Medicare taxes, unlike the annual wage limit for Social Security taxes.

The medicare hospital insurance tax is paid half by employees through payroll deductions and half by the employer. Accordingly, employees pay a Medicare tax rate of 1.45% (half of the 2.9% rate). Self-employed persons pay both halves of the Medicare tax since they are both the employee and the employer. However, self-employed persons are allowed to deduct half of the Medicare tax as an adjustment to income. Self-employed persons calculate and pay their Medicare tax when filing their personal tax return as part of the self-employment tax.

Starting in the year 2013, the Medicare tax will be expanded. The tax rate will be increased for higher-income individuals, and the income subject to the Medicare tax will be expanded to include investment income. Technically, this additional tax is called the unearned income Medicare contribution tax, and was enacted as part of the health care reform laws.

The unearned income Medicare contribution tax is an additional tax of 3.8%. This tax is in addition to any regular income taxes. The tax is calculated by multiplying the 3.8% tax rate by the lower of the following two amounts: net investment income for the year; or modified adjusted gross income over a certain threshold amount. --http://taxes.about.com/od/payroll/a/Medicare-Tax.htm

···

On 9/23/2012 3:41 PM, Queen of Comps wrote:

http://www.taxabletalk.com/2010/03/18/unearned-income-tax-in-new-healthcare-bill-will-impact-gambling/

Marissa, my co-author of Tax Help for Gamblers and an enrolled agent, says that the above explanation is �wrong for now.� We need to wait until the final regulations come out in December. She answered this question on Twitter. (@taxpro4gamblers) You may ask other tax questions there.

------------------------------------------
Jean $�ott, Frugal Gambler
http://queenofcomps.com/
You can read my blog at
http://jscott.lvablog.com/

-----Original Message-----
From: mailto:vpFREE%40yahoogroups.com [mailto:mailto:vpFREE%40yahoogroups.com] On Behalf Of
sulbimenfg311
Sent: Monday, September 17, 2012 9:46 PM
To: mailto:vpFREE%40yahoogroups.com
Subject: [vpFREE] New unearned income tax

In 2013 a 3.8% unearned income tax goes into effect for taxpayers with MAGI
over $200,000 if single and $250,000 if married. Gambling income BEFORE
deductions for losses counts as unearned income. As someone who plays mostly
$10 machines I guess I'll have to move way down in stakes, file as a pro, or
give up VP. Since a large percentage of my income comes from other sources,
not sure filing as a pro is an option. Just wondering how everyone who plays
stakes high enough to be impacted by the new law is planning on handling
this..

Taken from
http://www.taxabletalk.com/2010/03/18/unearned-income-tax-in-new-healthcare-
bill-will-impact-gambling/

"The new healthcare legislation contains plenty of taxes. One especially bad
one is a new 3.8% tax on unearned income above $200,000. This will have a
very bad impact on amateur gamblers.

When I last looked at the bill, the tax was 2.9%. In the "final" version of
the bill, it's up to 3.8%. Let's take a hypothetical gambler, Joe Student.
Mr. Student has $500,000 of winning sessions and $495,000 of losing
sessions. After his standard deduction and exemption he owes no tax.

But not in the near future. He'll owe 3.8% on $300,000 of mostly phantom
income, or $11,400. What will Joe Student do? He'll cheat on his taxes, of
course. Pay $6,400 more than what he made on his income-you must be kidding!
But that's exactly what the legislation dictates."

------------------------------------
From: Cogno Scienti
Sent: Monday, September 17, 2012 10:21 PM
To: vpFREE@yahoogroups.com <mailto:vpFREE%40yahoogroups.com>
Subject: RE: [vpFREE] New unearned income tax
I've been following this since it started. While we won't know for sure
until the IRS actually spells it out, all of the articles I've read other
than the one you quoted from Russ Fox say that the tax is only on net
investment income, which probably does not include gambling winnings.
However, in the same way that boosting your AGI already costs you more in
phased-out deductions, it will also mean that the 3.8% tax will apply to
more or all of your investment income.

Filing as a pro may actually cost you more if you don't have huge investment
income, since there is self-employment tax and an increased Medicare tax.

I'm watching this closely in case Russ is right and gambling winnings are
subject to the 3.8% tax, but so far all the other authorities I've read
don't mention gambling winnings.

Cogno

[mikechaudhury]

That "explanation" in "taxable talk" was also very political and biased, therefore to me at least calling into question its validity and usefulness.

···

----- Original Message -----
From: "Queen of Comps" <queenofcomps@cox.net>
To: "vpFREE" <vpFREE@yahoogroups.com>
Sent: Sunday, September 23, 2012 3:41:06 PM
Subject: Re: [vpFREE] New unearned income tax

http://www.taxabletalk.com/2010/03/18/unearned-income-tax-in-new-healthcare-bill-will-impact-gambling/

Marissa, my co-author of Tax Help for Gamblers and an enrolled agent, says that the above explanation is “wrong for now.” We need to wait until the final regulations come out in December. She answered this question on Twitter. (@taxpro4gamblers) You may ask other tax questions there.

------------------------------------------
Jean $¢ott, Frugal Gambler
http://queenofcomps.com/
You can read my blog at
http://jscott.lvablog.com/

-----Original Message-----
From: mailto:vpFREE%40yahoogroups.com [mailto:mailto:vpFREE%40yahoogroups.com] On Behalf Of
sulbimenfg311
Sent: Monday, September 17, 2012 9:46 PM
To: mailto:vpFREE%40yahoogroups.com
Subject: [vpFREE] New unearned income tax

In 2013 a 3.8% unearned income tax goes into effect for taxpayers with MAGI
over $200,000 if single and $250,000 if married. Gambling income BEFORE
deductions for losses counts as unearned income. As someone who plays mostly
$10 machines I guess I'll have to move way down in stakes, file as a pro, or
give up VP. Since a large percentage of my income comes from other sources,
not sure filing as a pro is an option. Just wondering how everyone who plays
stakes high enough to be impacted by the new law is planning on handling
this..

Taken from
http://www.taxabletalk.com/2010/03/18/unearned-income-tax-in-new-healthcare-
bill-will-impact-gambling/

"The new healthcare legislation contains plenty of taxes. One especially bad
one is a new 3.8% tax on unearned income above $200,000. This will have a
very bad impact on amateur gamblers.

When I last looked at the bill, the tax was 2.9%. In the "final" version of
the bill, it's up to 3.8%. Let's take a hypothetical gambler, Joe Student.
Mr. Student has $500,000 of winning sessions and $495,000 of losing
sessions. After his standard deduction and exemption he owes no tax.

But not in the near future. He'll owe 3.8% on $300,000 of mostly phantom
income, or $11,400. What will Joe Student do? He'll cheat on his taxes, of
course. Pay $6,400 more than what he made on his income-you must be kidding!
But that's exactly what the legislation dictates."

------------------------------------
From: Cogno Scienti
Sent: Monday, September 17, 2012 10:21 PM
To: vpFREE@yahoogroups.com
Subject: RE: [vpFREE] New unearned income tax
I've been following this since it started. While we won't know for sure
until the IRS actually spells it out, all of the articles I've read other
than the one you quoted from Russ Fox say that the tax is only on net
investment income, which probably does not include gambling winnings.
However, in the same way that boosting your AGI already costs you more in
phased-out deductions, it will also mean that the 3.8% tax will apply to
more or all of your investment income.

Filing as a pro may actually cost you more if you don't have huge investment
income, since there is self-employment tax and an increased Medicare tax.

I'm watching this closely in case Russ is right and gambling winnings are
subject to the 3.8% tax, but so far all the other authorities I've read
don't mention gambling winnings.

Cogno

[Non-text portions of this message have been removed]

[Non-text portions of this message have been removed]

[Sammy_Colfax]

Taxabletalk did that post in 2010. He has since revised his opinion of the regulation when I sent him an email to clarify (he happens to be my accountant). And he decided to post to his blog as well. . .

http://www.taxabletalk.com/2012/09/23/does-the-new-unearned-income-medicare-contribution-tax-impact-amateur-gamblers/

Sammy

···

--- In vpFREE@yahoogroups.com, "Queen of Comps" <queenofcomps@...> wrote:

http://www.taxabletalk.com/2010/03/18/unearned-income-tax-in-new-healthcare-bill-will-impact-gambling/

Marissa, my co-author of Tax Help for Gamblers and an enrolled agent, says that the above explanation is “wrong for now.” We need to wait until the final regulations come out in December. She answered this question on Twitter. (@taxpro4gamblers) You may ask other tax questions there.

------------------------------------------
Jean $¢ott, Frugal Gambler
http://queenofcomps.com/
You can read my blog at
http://jscott.lvablog.com/

-----Original Message-----
From: mailto:vpFREE%40yahoogroups.com [mailto:mailto:vpFREE%40yahoogroups.com] On Behalf Of
sulbimenfg311
Sent: Monday, September 17, 2012 9:46 PM
To: mailto:vpFREE%40yahoogroups.com
Subject: [vpFREE] New unearned income tax

In 2013 a 3.8% unearned income tax goes into effect for taxpayers with MAGI
over $200,000 if single and $250,000 if married. Gambling income BEFORE
deductions for losses counts as unearned income. As someone who plays mostly
$10 machines I guess I'll have to move way down in stakes, file as a pro, or
give up VP. Since a large percentage of my income comes from other sources,
not sure filing as a pro is an option. Just wondering how everyone who plays
stakes high enough to be impacted by the new law is planning on handling
this..

Taken from
http://www.taxabletalk.com/2010/03/18/unearned-income-tax-in-new-healthcare-
bill-will-impact-gambling/

"The new healthcare legislation contains plenty of taxes. One especially bad
one is a new 3.8% tax on unearned income above $200,000. This will have a
very bad impact on amateur gamblers.

When I last looked at the bill, the tax was 2.9%. In the "final" version of
the bill, it's up to 3.8%. Let's take a hypothetical gambler, Joe Student.
Mr. Student has $500,000 of winning sessions and $495,000 of losing
sessions. After his standard deduction and exemption he owes no tax.

But not in the near future. He'll owe 3.8% on $300,000 of mostly phantom
income, or $11,400. What will Joe Student do? He'll cheat on his taxes, of
course. Pay $6,400 more than what he made on his income-you must be kidding!
But that's exactly what the legislation dictates."

------------------------------------
From: Cogno Scienti
Sent: Monday, September 17, 2012 10:21 PM
To: vpFREE@yahoogroups.com
Subject: RE: [vpFREE] New unearned income tax
I've been following this since it started. While we won't know for sure
until the IRS actually spells it out, all of the articles I've read other
than the one you quoted from Russ Fox say that the tax is only on net
investment income, which probably does not include gambling winnings.
However, in the same way that boosting your AGI already costs you more in
phased-out deductions, it will also mean that the 3.8% tax will apply to
more or all of your investment income.

Filing as a pro may actually cost you more if you don't have huge investment
income, since there is self-employment tax and an increased Medicare tax.

I'm watching this closely in case Russ is right and gambling winnings are
subject to the 3.8% tax, but so far all the other authorities I've read
don't mention gambling winnings.

Cogno

[Non-text portions of this message have been removed]