Archive for the ‘Ohio’ Category

The Flow of AGI from One State to Another

Saturday, July 20th, 2013

From watchdog.org comes an interesting interactive map showing how money has flowed from state to state. Back when I moved to Nevada from California, I noted this issue. Here’s yet more verification that this is real.

The five biggest losers were:
1. New York ($68.10 billion in annual Adjusted Gross Income (AGI))
2. California ($45.27 billion in annual AGI)
3. Illinois ($29.27 billion in annual AGI)
4. New Jersey ($20.62 billion in annual AGI)
5. Ohio ($18.39 billion in annual AGI)

The five biggest winners were:
1. Florida ($95.61 billion in annual AGI)
2. Arizona ($28.30 billion in annual AGI)
3. North Carolina ($25.12 billion in annual AGI)
4. Texas ($24.94 billion in annual AGI)
5. Nevada ($18.17 billion in annual AGI)

Sure, some of this is retirees moving from the snow belt to the sun belt. But California is anything but part of the snow belt; it’s clear that successful individuals are fleeing high tax states for low tax states. We here in Nevada are appreciative of the $9.59 billion in annual AGI that has moved from the Bronze Golden State to the Silver State.

Interestingly, the interactive map allows you to look county-by-county. The areas that one would think would show AGI growth are losing AGI. The area around Silicon Valley has lost AGI; so have Los Angeles and Orange County. Sure, some of this is retirees moving to the desert (Riverside County, which includes Palm Springs, showed an increase in AGI). However, there is no chance that this is just caused by retirees.

Taxes matter, and individuals absolutely do relocate because of taxes.

Ohio Back on the Bad List for Gamblers

Friday, July 12th, 2013

When Ohio legalized casino gambling in 2010, they also added a deduction for gambling losses effective January 1, 2013. Taxdood reported that the new budget signed into law repeals this deduction. He believes it’s retroactive; I can confirm that it is retroactive. This is bad news for amateur Ohio gamblers, but will have no impact for professional gamblers; professional gamblers can take gambling losses (up to the amount of their winnings) on their Schedule C.

Here is the list of bad states for gamblers with the reasons why:

Connecticut [1]
Hawaii [2]
Illinois [1]
Indiana [1]
Massachusetts [1]
Michigan [1]
Minnesota [3]
Mississippi [4]
New York [5]
Ohio [1] [6]
Washington [7]
West Virginia [1]
Wisconsin [1]

NOTES:

1. CT, IL, IN, MA, MI, OH, WV, and WI do not allow gambling losses as an itemized deduction. These states’ income taxes are written so that taxpayers pay based (generally) on their federal Adjusted Gross Income (AGI). AGI includes gambling winnings but does not include gambling losses. Thus, a taxpayer who has (say) $100,000 of gambling winnings and $100,000 of gambling losses will owe state income tax on the phantom gambling winnings. (Michigan does exempt the first $300 of gambling winnings from state income tax.)

2. Hawaii has an excise tax (the General Excise and Use Tax) that’s thought of as a sales tax. It is, but it is also a tax on various professions. A professional gambler is subject to this 4% tax (an amateur gambler is not).

3. Minnesota’s state Alternative Minimum Tax (AMT) negatively impacts amateur gamblers. Because of the design of the Minnesota AMT, amateur gamblers with significant losses effectively cannot deduct those losses.

4. Mississippi only allows Mississippi gambling losses as an itemized deduction.

5. New York has a limitation on itemized deductions. If your AGI is over $500,000, you lose 50% of your itemized deductions (including gambling losses). You begin to lose itemized deductions at an AGI of $100,000.

6. Ohio currently does not allow gambling losses as an itemized deduction. However, effective January 1, 2013, gambling losses will be allowed as a deduction on state income tax returns. Unfortunately, those gambling losses will not be deductible on city or school district income tax returns, so Ohio will remain a bad state for amateur gamblers. Because of the rescinding of the law allowing gambling losses as a deduction, Ohioans cannot deduct gambling losses on their state, city, or school district returns.

7. Washington state has no state income tax. However, the state does have a Business & Occupations Tax (B&O Tax). The B&O Tax has not been applied toward professional gamblers, but my reading of the law says that it could be at any time.

Hat Tip: Taxdood
Link to full Ohio budget

Copyrighting a Name or 83 Years

Thursday, December 27th, 2012

As a published author, I’m very aware of copyrights. The books I’ve written are copyrighted. This blog is copyrighted. That doesn’t prohibit anyone from making an excerpt–that’s covered under “fair use”–but it does prohibit individuals from plagiarizing the blog. That has happened, and I had to have my attorney send a cease and desist letter. But I digress….

There are things you cannot copyright, too. One of the things that you cannot copyright is your own name. A Youngstown, Ohio man who pleaded guilty to part in a $3 million tax fraud has billed the Youngstown Vindicator $6 million for using his name in two stories. The man, who is facing 83 years at ClubFed, may be waiting those 83 years for payment (when he would be 124). Of course, if you become “in the news” (which would include pleading guilty to your part in a $3 million crime), you become fair game for the news media.

Hat Tip: Joe Kristan

Bad States for Gamblers

Monday, October 22nd, 2012

It’s been a while since I’ve listed out the bad states for gamblers. Here’s an updated list. Make sure you read the notes because while all of these states have tax systems that are problematic for gamblers, some impact amateurs while others impact professionals. Note that I do not cover the laws that impact gambling here (such as Washington State’s law that makes online gambling a Class C felony).

Connecticut [1]
Hawaii [2]
Illinois [1]
Indiana [1]
Massachusetts [1]
Michigan [1]
Minnesota [3]
Mississippi [4]
New York [5]
Ohio [6]
Washington [7]
West Virginia [1]
Wisconsin [1]

NOTES:

1. CT, IL, IN, MA, MI, WV, and WI do not allow gambling losses as an itemized deduction. These states’ income taxes are written so that taxpayers pay based (generally) on their federal Adjusted Gross Income (AGI). AGI includes gambling winnings but does not include gambling losses. Thus, a taxpayer who has (say) $100,000 of gambling winnings and $100,000 of gambling losses will owe state income tax on the phantom gambling winnings. (Michigan does exempt the first $300 of gambling winnings from state income tax.)

2. Hawaii has an excise tax (the General Excise and Use Tax) that’s thought of as a sales tax. It is, but it is also a tax on various professions. A professional gambler is subject to this 4% tax (an amateur gambler is not).

3. Minnesota’s state Alternative Minimum Tax (AMT) negatively impacts amateur gamblers. Because of the design of the Minnesota AMT, amateur gamblers with significant losses effectively cannot deduct those losses.

4. Mississippi only allows Mississippi gambling losses as an itemized deduction.

5. New York has a limitation on itemized deductions. If your AGI is over $500,000, you lose 50% of your itemized deductions (including gambling losses). You begin to lose itemized deductions at an AGI of $100,000.

6. Ohio currently does not allow gambling losses as an itemized deduction. However, effective January 1, 2013, gambling losses will be allowed as a deduction on state income tax returns. Unfortunately, those gambling losses will not be deductible on city or school district income tax returns, so Ohio will remain a bad state for amateur gamblers.

7. Washington state has no state income tax. However, the state does have a Business & Occupations Tax (B&O Tax). The B&O Tax has not been applied toward professional gamblers, but my reading of the law says that it could be at any time.

Ohio Gamblers: Don’t Forget Your City Income Tax

Sunday, August 26th, 2012

Ohio has (or will soon have) four casinos: one in each of Cincinnati, Cleveland, Columbus, and Toledo. The good news for Ohio gamblers is that beginning in 2013 Ohioans can deduct gambling losses on their state income taxes. The bad news is that you had better include those gambling earnings in your city income tax.

Columbus became the last of the four cities to expressly include gambling winnings in their city income tax. Ohio city income taxes do not allow a deduction for gambling losses, so these taxes all function as gross income taxes. And the tax rates aren’t small: Cincinnati is 2.1%, Cleveland is 2%, Columbus is 2.5%, and Toledo is 2.25%. I’m certain that slot winnings of $1,200 or more will now be on a W-2G with city income tax withheld.

For Sale: 24,000-26,000 Square Foot Home with an Interesting History

Monday, April 23rd, 2012

The house has 24,414 square feet. At least that much, as it was also measured at 26,828. It has lots of bedrooms: 16, 17, or 18 (depending on who does the counting). And it will soon be for sale, as the home’s original owner is enjoying a very lengthy stay at his new digs, ClubFed.

The home was built for Thomas Parenteau. If that name sounds familiar you may have read about his trial. It could have come out of the pages of a cheap novel:

So far we’ve found out that the mistress, Pamela McCarty, is the mother of Mr. Parenteau’s two daughters; that all three lived in the same mansion; phony jobs and phony paychecks; allegations of $18 million in fraudulent loans…and the trial should last a couple more weeks.

That’s what I wrote in 2010 when the trial was happening. Today that house can be yours. It has plenty of land, and for the Hollywood type who wants to get away from the hustle and bustle, its sits in Norwich Township in the northwest part of Columbus, Ohio. The home appears to be in excellent shape, and it can be yours for somewhere between $4 and $5.5 million.

As for Mr. Parenteau, he won’t be returning to the mansion. The Department of Justice sold the home to a bank; the bank plans on selling the home soon.

22 Years, But at Least He’ll be Away from his Wife and Mistress

Tuesday, August 30th, 2011

We’ve written about Thomas Parenteau before. His trial was straight out of a cheap novel: He was accused of tax fraud and money laundering while living in a 30,000 square foot mansion with his wife and his mistress. Last year, he was found guilty on 11 of 13 counts. Yesterday, Mr. Parenteau received 22 years at ClubFed for his crimes.

Joe Kristan and TaxDood have more.

$200,000,000 Refund Letters Come in Ohio, but the Refunds Won’t

Tuesday, March 15th, 2011

Some things are too good to be true. Imagine receiving a letter in the mail saying you will receive an income tax refund of $200,000,000. Yes, $200 million.

Well, 9,701 taxpayers in the Buckeye State got such letters. As first reported in the Sandusky Register, taxpayers were told that that because their refunds had been split into a paper check and direct deposit, just a paper check would be issued…for $200 million.

The letters were in error, of course, and according to the Ohio Department of Taxation the problem has been fixed. But it does bring up an interesting issue that a few of my clients have faced: What do you do if you receive a refund you are not entitled to? Let’s say that you actually receive a check from the Ohio Department of Taxation for $200 million.

If you receive a tax refund you are not entitled to, the government can and will ask for that money back…plus interest. If you get such a check, don’t cash it — it’s not your money. Contact the tax agency and let them know of the problem. They’ll likely direct you to mail the check back to the agency.

In any case, Ohio, which is facing an $8 billion budget deficit, won’t be sending out $200 million refunds. The letters themselves and the resultant publicity have added a minor amount of money to their deficit (and some humor to tax season).

Carpet Owner Gets a Year at ClubFed

Tuesday, February 1st, 2011

Leif Rozin is a former owner of Buddy’s Carpet in Cincinnati. Back in 2008 he was convicted on tax fraud charges. It took a while but he was finally sentenced last Friday; he received one year at ClubFed and must make restitution of $380,000 in tax.

The fraud scheme involved sham insurance policies purchased in the US Virgin Islands. The government isn’t appreciative of sham anythings used as tax deductions. The “Buddy” of Buddy’s Carpet & Flooring, Burton B. “Buddy” Kallick, died in 2007 before the case came to trial.

Helping Boss, Wife, and His Mistress Leads to ClubFed, Not a Cheap Novel

Monday, November 22nd, 2010

Dennis Sartain used to be the typical accountant. He worked for Thomas Parenteau, a Columbus, Ohio homebuilder. Of course, Mr. Parenteau was found guilty of 11 counts of tax evasion and related charges, and that’s not typical. And as I reported earlier, Mr. Parenteau’s case comes straight from the pages of a cheap novel yet it’s absolutely true.

Well, Mr. Sartain was sentenced this week and he’ll have plenty of time to think about his dysfunctional employer and how he helped him commit tax evasion; he received 11 years at ClubFed. Mr. Sartain had turned down a two-year sentence; that’s an oops moment that Joe Kristan notes (along with more of the sordid details from this case).