Archive for the ‘Ohio’ Category

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]


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).

We Won’t Have Jim Traficant to Kick Around

Wednesday, November 3rd, 2010

Well, Election Day has come and gone. Congressional races generally went to Republicans, and the GOP will be the majority party in the House next January. That means that John Boehner of Ohio will be the next Speaker.

Mr. Boehner had no trouble winning his district (he got over 65% of the vote). However, Jim Traficant will not be heading back to Congress. Mr. Traficant, who was convicted on tax and corruption charges a few years ago, lost his bid to be elected to Congress. He received just 16% of the vote in Ohio’s 17th District. The current Congressman, Tim Ryan, was reelected with nearly 54% of the vote.

It would have been fun for tax bloggers to have Mr. Traficant in Congress. Fortunately, Ohioans apparently were sane last night.

Guess Who’s Coming to Dinner!

Monday, August 30th, 2010

Our favorite convicted tax felon has made the ballot in Ohio. James Traficant has seven signatures more than required and will be running as an Independent for Congress in Ohio’s 17th Congressional District. The Mahoning County Board of Elections will reportedly meet today and approve his name to be on the ballot; the Trumbell County Board of Elections will meet later this week and do the same.

For those who don’t remember the bombastic former Congressman and convicted felon, James Traficant was known for one-liners; “Beam me up” was one of his favorites. Back in 2002 he was indicted on federal corruption charges. He was convicted of ten counts including bribery and tax evasion. He was released in 2009.

Somehow this Congress deserves to have Jim Traficant. I’m not sure the American people do, though.

Ohio Adds Gambling Loss Deduction…In 2013

Wednesday, July 14th, 2010

The Ohio legislature recently passed HB 519. The measure creates the Ohio Casino Commission to run Ohio’s soon-to-exist casinos. There’s a bit of good news for Ohioans buried in the measure. Beginning with tax year 2013, Ohio residents will be able to deduct gambling losses up to the amount of their winnings. Professional gamblers today can already take their gambling losses (they are allowed to net their wins and losses on Schedule C); this measure will allow amateur gamblers to take the losses.

Note that this deduction will be available only if you itemize your deductions, and only to the extent that federal law allows gambling losses to be deducted. I mention this because some Democratic Congresscritters are discussing eliminating all itemized deductions…which would be disastrous for amateur gamblers.

The legislation also notes an obvious fiscal reality: “[The Act] [a]llocates to Ohio all casino gaming winnings paid by any person licensed by the Ohio Casino Control Commission so that winners pay Ohio income taxes on such winnings.” Expect non-residents of Ohio who win significant amounts in Ohio casinos to receive W-2Gs so that Ohio can make sure that they receive their fair share of the tax revenues.

Do note that Ohio has city income taxes. Each city would need to adopt a similar measure for gambling losses to be deductible on city income taxes. Given current budgetary shortfalls, that’s unlikely to occur in the near future.