LGH Consulting

It’s easy to focus on the excitement of a big win. But before you spend lottery, gambling or other winnings, be sure you understand the tax impact.

Federal tax law generally treats such winnings as taxable income. Knowing the basic rules can help you avoid surprises when you file your 2026 return next year. For example, if you win more than $5,000, generally the payer (lottery agency, casino, etc.) will withhold 24% for federal tax purposes — which may or may not be enough to cover your tax liability — and send you and the IRS a Form W-2G showing the winnings paid and tax withheld.

Summer is a good time to see whether your income, deductions and investment activity are lining up as expected. Reviewing your tax picture now gives you more time to take steps to reduce or defer taxes. For example, if you expect this year’s income to be near the threshold for a higher bracket, consider strategies for reducing your taxable income to stay out of that bracket. If you’ve realized, or expect to realize, significant capital gains this year, consider selling some depreciated investments to generate losses you can use to offset those gains. And if you’d like help evaluating these and other midyear tax strategies, contact us.

Self-employed individuals often miss legitimate tax savings because they fail to keep adequate records or misunderstand the rules. Don’t let this happen to you.

Follow this golden rule: Business expenses must be ordinary (common in your industry) and necessary (helpful and appropriate for the business). Of course, you can deduct supplies, materials, and employee payroll and benefits. But don’t overlook other deductible costs — such as for your home office, education, business meals and travel, and business vehicles.

We can help you identify qualifying business expense deductions and establish recordkeeping practices that support them. Contact us to learn more.

Will your Social Security benefits be taxable? A portion might be. How much depends on your provisional income, your overall income and IRS thresholds.

Provisional income is your adjusted gross income with some additional calculations. You may have to report up to 85% of your Social Security benefits as taxable income if your provisional income is over $34,000 ($44,000 for joint filers). If you file separately from your spouse who lived with you at any time during the year, the threshold is $0.

Smart tax planning can potentially reduce your liability. We can help project your provisional income and review your overall tax situation to identify strategies that make sense for you.