National Humiliation Is Just Another Tuesday Afternoon In America

National Humiliation Is Just Another Tuesday Afternoon In America

June 6, 2023  By Simon Black  Sovereign Man

When Sextus Julius Africanus was born in the city of Jerusalem around the year 160 AD, the Roman Empire was still near the peak of its power.  By the time Sextus was born, Antoninus Pius had ruled the empire with a steady hand for more than twenty years; his reign was peaceful and highly effective, and he left behind a strong economy and vast public treasury.

The following year in 161 AD, when Sextus was still just a baby, Marcus Aurelius became emperor and ruled wisely for nineteen years as an assiduous, diligent philosopher king.

Sextus was a young man just starting to make his way in the world when Marcus Aurelius passed away in 180 AD. And this is when things really started to unravel in Rome.

Marcus Aurelius was followed by his complete dirt bag of a son, Commodus (who was probably every bit as evil and insane as he was portrayed in the film Gladiator).

Commodus ruled brutally for twelve years until his assassination in 192 AD, after which several more emperors rose to power and were assassinated within a matter of months.

Finally Septimus Severus rose to power in 193 AD and ruled for 18 years; he nearly bankrupted the empire with his constant warfare and expansion of the state, and he heavily debased the denarius coin from 81.5% silver to 54% silver.

Septimus Severus was succeeded by his son Caracalla, whose first order of business was to murder his brother… and then further debase the currency and bankrupt the treasury.

Caracalla was assassinated after six years and succeeded by Macrinus, who himself was overthrown and executed barely a year after becoming emperor.

Macrinus was succeeded by the sexually tormented adolescent Elagabalus, who is purported to have offered half of the empire to any doctor who could turn him into a woman.

Elagabalus was slain after four years in power, then succeeded by his cousin Severus Alexander. His 13-year reign was marked by a massive border crisis and further debasement of the currency; but most notably, during the reign of Severus Alexander, his imperial troops began running wild outside of the law and began indiscriminately assassinating anyone they wanted.

By the time Severus Alexander himself was assassinated in 235 AD, the young baby boy I told you about in the beginning of this letter-- Sextus Julius Africanus-- was 75 years old.

Sextus was born at the end of the Roman Empire’s period of dominance. And throughout the course of his life, he witnessed and lived through Rome’s gradual-- then sudden-- decline.

As a child and young adult, Sextus lived in a Rome that was powerful and unparalleled, and he enjoyed an incredible era of peace and prosperity.

By the time he entered adulthood, the cracks were already visible. Inflation grew rampant. The economy began stagnating. Multiple pandemics had taken place. The barbarians started flooding across the border. The treasury was depleted. And the imperial government became completely dysfunctional, incapable of even basic administration or responsibility.

Sextus Julius Africanus experienced all of this decline first hand. It must have been exasperating. And frankly, many of us today can probably empathize.

When I started Sovereign Man back in 2009, I had a very clear thesis in mind: the United States (along with the West in general) is in decline.

Back then that was a controversial statement to make. Today it’s painfully obvious.

What’s more, the decline seems to be accelerating, conforming to the mathematic model of logarithmic decay; it’s similar to how Hemingway described going bankrupt in The Sun Also Rises: “gradually, then suddenly.”

And we can see it just about everywhere.

From a fiscal perspective, the US is a complete train wreck. The national debt is about to pass $32 trillion as I write this, equivalent to roughly 122% of GDP-- a record high.

On top of that, though, the government continues to overspend by trillions of dollars each year, making the debt problem even worse. And Social Security’s trust funds are set to run out of money within ten years.

The currency is also in the dumps. The Federal Reserve debased the US dollar as heavily as the Romans debased their own currency, causing rampant inflation.

Plus, between the Fed’s incompetence and the US government’s irresponsible spending, the dollar is on the verge of losing its status as the world’s dominant reserve currency.

Socially we can see the country coming apart as well. Socialism is on the rise. Cancel culture and censorship reign. Sociopolitical divisions are high.

The education system is crumbling… and the teachers’ unions couldn’t possibly care less. Homeless and crime rates are appalling. Public trust levels are at record lows.

Many politicians at the highest levels are either stupid, incompetent, corrupt, dangerously narcissistic, medically unfit, or all of the above. And the most recent debt ceiling fiasco shows their ineptitude to even be able to negotiate a timely solution among themselves. 

Throughout all of this chaos, tensions with Russia, China, and Iran are on the rise… while the US military is being weakened by woke politics, fiscal mismanagement, and terrible leadership.

It seems like every few days there’s another major embarrassment… from a guy who never met a staircase he can’t fall up, to the humiliating withdrawal from Afghanistan, to a major crisis in the US banking system, to ‘mostly peaceful’ protests, to the debt ceiling soap opera.

And every one of these emboldens America’s adversaries.

Many of us are old enough to remember a time when such things were unthinkable, when America’s reputation for strength was unquestionable.

But these days, a major, national humiliation is just another Tuesday afternoon in the Land of the Free.

It’s exasperating. And Sextus Julius Africanus probably felt the same way, shaking his head in disbelief as he lived through the decline.

To be clear, even despite America’s gargantuan challenges, it is still possible to solve these problems and navigate out of this mess. And the basic ideas are quite simple: Capitalism. Productivity. Fiscal restraint. Self-reliance.

But the people in charge don’t seem to have a clue what they’re doing. And this is why it makes so much sense to have a Plan B.

To your freedom,  Simon Black, Founder  Sovereign Man

https://www.sovereignman.com/trends/national-humiliation-is-just-another-tuesday-afternoon-in-america-147644/

Cash Envelope System: How Does This Budgeting Method Work?

Cash Envelope System: How Does This Budgeting Method Work?

by Todd Kunsman

If you find yourself struggling to budget and save money, there is a technique you might want to try: the cash envelope system.  While there are many new personal finance platforms and apps that can help, sometimes it can be a bit overwhelming.   And don’t get me wrong, I am a fan of various budgeting apps that exist today.  But sometimes it’s better to go back to basics and remove the digital technology out of your life.

If you are interested in a more “physical” version of budgeting, then the cash envelope system might be for you. Below, you’ll learn everything you need to know about this budgeting method.

What Is The Cash Envelope System?

The cash envelope system is a systematic personal budgeting method. It relies on being able to use cash for almost all fixed and variable purchases throughout the month. So if you haven’t got the cash left, you can’t go splurging on luxury buys.

The envelope system tries to control impulse buying and help you live within your means. And it works by having the saver (that’s you!) plan each and every purchase over the next thirty days.

Advantages of The Cash Envelope System

There are several benefits of using the cash envelope system; not least being that the method can enable you to get into a good budgeting routine with your money.

It turns out that only 32% of US families currently maintain a budget which can be a risky way of living.

Are you the type to wonder where exactly your money goes each month? Using the envelope method means you are tracking your spending (down to the last cent!) and will highlight exactly where you need to cut your spending or budget more for.

Plus, if you’re prone to overspending, the cash envelope system can prevent it altogether. If you don’t have the cash in your hands; you can’t buy — it’s super simple.

Disadvantages of The Cash Envelope System

Unfortunately, this budgeting method means you will miss out on those all important credit card bonuses, like travel points and rewards. And while they might not have an exact cash value, credit card rewards can be pretty lucrative!

The other negative factor of the cash envelope method is that holding and carrying a lot of cash can make you feel unsafe. Of course, any of us can be vulnerable to theft in a range of situations, but you may feel uncomfortable pulling large amounts from the ATM or using a credit card.

Steps To Starting The Cash Envelope System

To continue reading, please go to the original article here:

https://investedwallet.com/cash-envelope-system/

The Budget Calendar: What Is It And Do You Need One?

The Budget Calendar: What Is It And Do You Need One?

August 17, 2021 by Todd Kunsman

One of the first and easiest steps you can take with your finances is to create a personal budget calendar.  It’s an effective way to understand what your income and expenses look like, without having to try and remember off the top of your head.  Typically, you think you’ll remember everything and can manage your money without writing things down.

I certainly thought the same thing, but I quickly realized how I was mishandling everything when I was more tactical.  So what are the benefits of creating a budget calendar? How can you get started with one and maintain it for the foreseeable future? Jump in below to learn more!

What Is a Budget Calendar?

A budget calendar is similar to your everyday calendar, except it tracks the dates of your income and expenses. For example, you’ll note which days your wage comes in, the day each bill leaves your account and when subscriptions are paid, etc.

Every good budget calendar will include:

Your income – How much you are earning from each paycheck or what you make if you work for yourself.

Current expenses – Typically, your bills will fall on similar days each month. Planning these out on a calendar gives you the big picture.

Current savings – How you plan on scheduling money to save in your emergency fund or other investments.

You can certainly go a bit deeper, but at a high-level, those three areas will get you much farther with your finances than people who do not budget at all.

But this budget calendar idea exists to enable you to take a more careful approach towards money, to build a simple family budget, and plan a budget that fits your lifestyle.

The Benefits of A Budget Calendar

Can you believe that just 30% of U.S. households have a long-term financial plan? Budgeting allows us to keep track of our income, save money better, and ensure we are spending it where we have intended to.

Plus, if you’re looking to escape paycheck to paycheck living then having a budget is key.

Luckily, there’s not just one way to budget. Finding a budgeting style that works for you is important, as it will help you stick to your money intentions and reach your goals.

Opting for a budget calendar should help you:

To continue reading, please go to the original article here:

https://investedwallet.com/budget-calendar/

Budgeting 101: The Basic Tips to Improve Your Finances

Budgeting 101: The Basic Tips to Improve Your Finances

August 8, 2021 by Todd Kunsman

One of the best ways to start improving your finances and master money management is through the basics: budgeting 101.  While it might not be the most fun to calculate your numbers and figure out how to spend and save money — it’s also critical early on in your journey.

By understanding and creating a personalized budget, you take control of your money and create a roadmap that will help you succeed now and in the future.

But what are the budgeting basics? How do you get started and are there different types of budget styles?

Don’t worry, I’ll cover everything you need to know in this budgeting 101 guide below.

What Is A Budget?

A budget is a plan that helps you manage your income, current expenses, and helps you save for your goals over set periods of time. With a budget, you have a plan for your spending and understand where your financial health currently stands.

Some people prefer to create a budget via writing it down on paper, while others like using an Excel spreadsheet or a personal finance app or software. For example, creating a budget calendar is a solid option.

Who should be budgeting?

Budgeting is an important tool for every person who’s earning and spending money (so pretty much everyone). It’s an activity that helps you remain in control of your money, stay on track with your goals and keep away from financial stress.

And understanding budgeting 101 will help you improve your relationship with money and offer you an accurate picture of your financial life. It’s a tool to help you get out of debt, save for your future and be prepared for any unexpected challenges.

Often people assume they know their current finances and how much they are spending. I also felt that way a few years back. However, when I really sat down and looked at the numbers, I was way off and surprised at the amount of wasteful spending I was engaged in.

Budgeting for Beginners Basics

If you’re a budgeting beginner, here are some of the steps to help you get started in the world of budgeting. Naturally, you can build a more complicated and in-depth budget — but keeping it simple can also improve your finances significantly.

1. Calculate monthly income

To continue reading, please go to the original article here:

https://investedwallet.com/budgeting-101-tips/

10 Ridiculously Things People Would Do With $5 Billion

10 Ridiculously Things People Would Do With $5 Billion

June 4, 2023 by Claire Conway

Money can be a powerful tool, allowing us to achieve our dreams and desires. But what happens when someone is given an excessive amount of money and is asked to spend it in the dumbest way possible? This was the question posed in an online forum, and the answers were nothing short of ridiculous. From giant statues of themselves to private islands with volcanoes, people came up with some of the most extravagant and impractical ideas for spending $5 billion.

1. Build a Giant Statue of Themselves

One user said they would construct a 200-foot statue of themselves in the center of a city. They would also hire people to worship the statue and throw rose petals at their feet. This idea screams narcissism, but it’s not surprising that someone with $5 billion to burn would be egotistical enough to make it happen.

2. Cover a Yacht in Gold

Another user said they would purchase a yacht and have it entirely covered in gold. It’s hard to say if this is more about flaunting wealth or just trying to create a blinding distraction on the water. Either way, it’s a ridiculous and ostentatious idea.

3. Build a Castle Made Entirely of Ice Cream

One user suggested they would build a castle entirely out of ice cream, including the walls, floors, and furniture. It’s hard to imagine how this would work practically, and the idea of a melting castle made out of frozen dessert sounds like a nightmare for both the builder and the clean-up crew.

4. Create a Life-Size Replica of the Titanic and Sink It

 To continue reading, please go to the original article here:

https://investedwallet.com/dumb-things-with-5-billion-dollars/

11 Awesome Benefits of Budgeting Your Money

11 Awesome Benefits of Budgeting Your Money

March 24, 2021 by Todd Kunsman

If you want to start managing your money and get out of a financial rut, then you have to understand the benefits of budgeting.  For some people, creating and managing a budget is not that fun and can be quite tedious. Additionally, there is a stigma that having a budget means being extremely frugal and that you cannot have fun or spend any money on yourself.

Although you might need to live a more frugal style pending your current financial situation, budgeting is not about limiting your life completely or making you miserable.

What a personal budget does is show you where to allocate your money and how to distribute your income more effectively.

But if you are still skeptical and need more convincing, I put together a list of 11 awesome benefits of budgeting your money below. Let’s dive in!

Is Budgeting Hard?

For some folks, the mere mention of a budget conjures up images of mile-long spreadsheets, complex calculations, and tight spending restrictions that suck all the fun out of life. If that sounds like you, I have some good news: budgeting doesn’t have to be hard.

Making a budget isn’t complicated: you don’t need to be a financial expert, perform any fancy calculations, or give up everything you enjoy. You do have to be willing to put in the time to understand your expenses, make a realistic plan for your spending, and then stick to it. With a little work, anyone can do it — even you.

Benefits of Budgeting

The hardest part of budgeting is following the plan you’ve created. When the temptation to spend comes calling, it helps to understand and appreciate the benefits of budgeting your money. I’ve made a list of eleven budgeting benefits to convince you to give budgeting a try and to help give you the motivation to follow your plan once you’ve made it.

1. Puts You In Control of Your Money

Several years ago a friend told me, “Either you control your money, or it will control you.”  That’s one of the best pieces of advice I’ve ever gotten. Budgeting doesn’t restrict your spending.

Instead, it puts you in control of your money by helping you spend intentionally instead of wondering where all your money is going or why you never seem to have enough.

2. You Become Aware of Your Spending Habits

 Budgeting forces you to be aware of your spending habits. You may be shocked to find out how much you’ve been spending on lunches with co-workers, trips to Home Goods, coffee subscription boxes, or any number of other things.

Once you know where your money is going, you can use your budget to help you cut bad habits and form better ones.

3. Helps you set priorities

To continue reading, please go to the original article here:

https://investedwallet.com/benefits-of-budgeting/

America Can't Even Negotiate With Itself Anymore...

America Can't Even Negotiate With Itself Anymore...

Notes From the Field By Simon Black  June 5, 2023

This is really starting to look a lot like ancient Rome

In the late summer of 408 AD, a barbarian army under the command of Alaric, king of the Visigoths, set out on a leisurely march across the Italian countryside towards the city of Rome… so that he could burn it to the ground.

Alaric had been promised money by the Roman government in exchange for a military alliance between Rome and the Visigoths; but just before the money was supposed to have been paid, the Romans canceled the deal.

Talk about a bonehead move.

Alaric was a decorated warrior at the head of a powerful army. And the Western Roman Empire, by comparison, was barely even functional anymore. The government was bankrupt, the currency was a joke, the economy was in the dumps, the military was weak, the borders were nonexistent… and there was no sense of unity in Roman society.

So it clearly made no sense to turn Alaric into an enemy. But then again, the emperor in the west was a weak, incompetent stooge named Honorius, whose legacy is so horrendous that he consistently ranks among the worst emperors in Roman history. And there’s some pretty stiff competition on that list.

Alaric, to his credit, actually tried to avoid conflict with the Romans and work out a resolution. But Honorius refused to negotiate… so Alaric gathered his troops and marched towards Rome.

Now, at that point in history, the city of Rome itself wasn’t even the capital of the western empire anymore; it had been moved to Milan, and then to Ravenna. But Rome was still among the largest and most prominent cities in the world, even in the early fifth century. And Alaric knew that sacking it would send shockwaves across the empire.

Alaric and his barbarian army were practically unopposed on their way to Rome; according to the ancient historian Zosimus, in fact, their march was so leisurely it was as if they were “at some festival” rather than heading to war.

They arrived in the fall of 408 AD and encircled the city, cutting it off from any resupply… meaning it would only be a matter of time before residents all starved to death and the Visigoths plundered the city.

The destruction of Rome was an unthinkable cataclysm. And so, with the barbarians literally at the gates, Honorius finally agreed to negotiate a deal. And it was a costly one-- many times more expensive than their original agreement.

That should have been the end of the story… and yet Honorius found a way to screw it all up again.

Early the following year in 409 AD, Honorius tried to double-cross Alaric by sending troops to ambush the Visigoths. The attack failed, and Alaric was infuriated by this violation of their treaty.

Again, to his credit, Alaric tried to negotiate a peaceful solution, and he asked for lands, titles, and tribute as compensation.

But Honorius-- who at that point was a highly experienced diplomat-- instead sent an insulting letter back to Alaric. Talks quickly broke down, and Alaric turned back towards Rome in late 409.

Once again-- and only after the barbarians were at the gate-- the government finally agreed to Alaric’s demands… and the destruction of Rome was narrowly avoided for a second time.

Yet then Honorius managed to screw it up for the third time in a row.

The following year, in 410 AD, Alaric and Honorius were set to meet near the capital city of Ravenna to discuss peace and cooperation.

But Alaric and his men were ambushed just prior to the meeting by Roman troops. He survived. And, completely fed up with Honorius, Alaric took his troops back to Rome for the third (and final) time in two years.

The Visigoths entered the city on August 24, 410 AD through Rome’s Salarian Gate, about 3 kilometers north of the Colosseum.

Alaric and his men spent three full days sacking the city. Almost everything of value was stolen or destroyed. Cultural treasures were defaced, monuments were ripped down, buildings were burned to the ground, and the city’s residents were killed or enslaved.

It was difficult to not think of this story when news broke about the debt ceiling ‘resolution’ late last week, because the two situations share many parallels.

The sack of Rome in 410 AD was a crisis of their own making. Decades of terrible strategic and financial decisions had reduced Rome to a shell of its former greatness, weakening the western empire considerably. Their enemies noticed.

The United States is in a similar position; decades of terrible decisions have led to a $31+ trillion national debt that grows by leaps and bounds every single year. Through its completely irresponsible addiction to spending, the government has weakened the country considerably… and America’s adversaries have noticed.

In the early 400s, Rome was led by a complete buffoon who, despite all of his years in government service, engineered a crisis by refusing to negotiate or to take an obvious risk seriously… only to ultimately cave and narrowly avoid an earth-shattering catastrophe.

This is a clear similarity to the debt ceiling fiasco that we saw play out over the last few months. The risk was obvious… and yet the guy who shakes hands with thin air refused to negotiate until the last minute, just barely averting disaster.

Waiting until the last minute to just barely avoid a major catastrophe is not a viable problem solving strategy. Neither is kicking the can down the road.

Yet every few years the debt ceiling becomes a major crisis. They consistently wait until the last minute, hastily negotiate a short-term patch, and kick the can down the road for another few years while they take the country even deeper into debt, until the whole cycle begins anew.

The Romans tried to do the same thing with the Visigoths: negotiate a terrible, last minute solution. Make the problem worse. Repeat.

This approach didn’t work in the early 400s, and it won’t work today. As the sack of Rome demonstrated, when you’re constantly taking things to the brink of disaster, eventually someone is going to go too far.

A worldwide financial meltdown triggered by the United States defaulting on its debt was very narrowly avoided. This time. Who’s to say that when this comes up again in 2025 that some idiot politician won’t take things too far?

The really ridiculous thing about the debt ceiling crisis was that it shows the inability of the US government to negotiate responsibly… with itself! This was literally a case of American politicians trying to resolve their differences with other American politicians.

How is this going to work out when the people on the other side of the table aren’t from another US political party… but from the Chinese Communist Party?

It’s worth thinking about given how the specter of conflict continues rising; just over the weekend, a Chinese naval vessel intentionally maneuvered to within 150 meters of US and Canadian ships in the Taiwan Strait. And this was just one of many obvious escalations in recent months.

The last point worth mentioning is that the sack of Rome illustrates how dangerous complacency can be.

When Alaric showed up in 408 AD for the first time, the city’s destruction was avoided. When he showed up the second time in 409 AD, the city’s destruction was avoided again.

So you can probably imagine that when Alaric and his barbarian army were on the way to Rome for the third time in 410 AD, the city’s residents probably felt confident that their leaders would once again figure out a last minute solution.

That misplaced confidence in their incompetent leaders cost Romans dearly.

It’s worth remembering that you don’t have to bet everything you’ve worked to achieve on today’s pitiful leadership; there are plenty of steps you can take to reduce your exposure to the risks that they’ve created (and continue to ignore).

You can, for example, hold a portion of your savings in an alternative asset like gold, which has a 5,000 year history of holding its value, especially in times of crisis.

You can set up more robust structures to help you save for retirement… which makes a lot of sense given the looming insolvency of Social Security’s major trust funds.

And you can even establish legal residency or citizenship in a foreign country, giving you a place to go in the event that you ever need to leave.

Some of these options take time to establish. And you don’t want to make the same historical mistake of waiting until the last minute-- just before a crisis-- to start taking action.

To your freedom,  Simon Black, Founder  Sovereign Man

https://www.sovereignman.com/trends/this-is-really-starting-to-look-a-lot-like-ancient-rome-147625/

Six Ways The Rich Save Big On Estate Taxes

Six Ways The Rich Save Big On Estate Taxes

Hayley Cuccinello   Fri, June 2, 2023

Six ways the rich save big on estate taxes, from putting houses in trusts to guaranteeing inheritance for future generations

The wealthiest taxpayers have many tools at their disposal to pay less to Uncle Sam.  Some tactics, like donating to charity via trusts, might seem far-fetched but are perfectly legal.  Lawyers and bankers to the ultra-rich told Insider how these rarified techniques work.

hanks to tax cuts made during the Trump administration, Americans can give or hand down nearly $13 million in assets without paying federal estate tax. Only 0.2% of taxpayers have to worry about this tax, and they hire top-notch accountants and lawyers to pay as little as possible.

"This is a wealthy person's playground problem," Robert Strauss, partner at the law firm Weinstock Manion, told Insider.

Some of these tax avoidance techniques might be eyebrow-raising, yet they are perfectly legal. For instance, taxpayers can put homes and country homes in trusts that last decades, and any appreciation in the property's value doesn't count toward their taxable estate. Life insurance, probably the least sexy area of financial planning, can be used to save tens of millions of dollars in taxes if bought from issuers in the Cayman Islands and Bermuda.

In the next two years, estate planning will rev up into high gear as the end of the Trump tax cuts approaches. Currently, individuals and married couples can gift or bequeath $12.92 million and $25.84 million, respectively, before a 40% federal estate tax kicks in. But that exemption, barring further legislation, will be cut in half at the end of 2025.

Here are six little-known techniques that the richest taxpayers use to pay less to Uncle Sam:

Using trusts to give away homes and country houses

Qualified personal residence trusts, better known as QPRTs, effectively freeze the value of a real estate property for tax purposes. The homeowner puts the primary residence or vacation home in the trust and retains ownership for however many years they choose. When the trust ends, the property is transferred out of the taxable estate. The estate only has to pay gift tax on the value of the property when the trust was formed even if the home has appreciated by millions in value.

QPRTs have become more popular in the past year as interest rate hikes confer another tax benefit. It seems too good to be true, but there are a few strings attached.

Passing wealth to future generations with trusts that last up to 1,000 years

From the Wrigley family behind the titular chewing gum brand to Jeff Bezos' mother, an Amazon investor, some of America's wealthiest use generation-skipping trusts to avoid paying wealth transfer taxes and provide for future heirs.

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/five-ways-rich-save-big-023512497.html

What Taxes Are Due on Gambling Winnings?

What Taxes Are Due on Gambling Winnings?

By ADAM BARONE   Updated February 23, 2023 

In 2021, about 76% of people visiting Las Vegas, Nevada took to the gambling tables.  Of all those who gamble, whether in Las Vegas, Atlantic City, New Jersey, or somewhere in between, not to mention on the web, a lucky few take home a lot of money.

Alas, if you win big while gambling, you do not get to keep every penny. Gambling winnings are fully taxable, and the Internal Revenue Service (IRS) has ways of ensuring that it gets its share. And it's not just casino gambling. Winnings from lotteries, horse races, off-track betting, sweepstakes, and game shows are taxable as well.

If it's any consolation, gambling losses are deductible if you itemize your deductions. But they're deductible only up to the amount that is offset by your winnings, and you must be able to prove it through records of your winnings and losses.

Before heading for the Las Vegas strip, make sure you understand the tax law as it relates to gambling to avoid a mess with the IRS down the road.

KEY TAKEAWAYS

If you win above a certain amount, the payer will deduct 24% from your winnings on the spot.

When you file your annual tax return, you'll report your winnings and your tax payments.

Depending on your tax bracket, you may then have to pay more or you may get a refund.

You can deduct gambling losses up to the amount of winnings that you report, so keep good records.

Gambling always involves a negative expected return—the house always has the advantage.

How Gambling Winnings Are Taxed

If you win a substantial amount of money in any legally operated game of chance, the payer of your winnings will deduct 24% of the total for taxes and will give you a copy of IRS Form W-2G to record the transaction.

What is "a substantial amount of money" in gambling? It depends on the game. It's $1,200 or more in winnings at slot machines or bingo games, but $1,500 for keno. It's $5,000 for sweepstakes, wagering pools, and lotteries.

In any case, 24% of the amount won will be deducted from your payout and sent directly to the IRS, with Form W-2G as the documentation. That 24% is an estimated tax. You might get some of it back or owe more.

 Taxes on winnings at games of skill like blackjack are not immediately withheld but you still are required to report the income and pay taxes on it.

Exceptions to the Rules

To continue reading, please go to the original article here:

https://www.investopedia.com/ask/answers/taxes-on-vegas-gambling-winnings/ 

Winning the Lottery: Dream or Nightmare?

Winning the Lottery: Dream or Nightmare?

Investopedia   Thu, June 1, 2023  By THE INVESTOPEDIA TEAM

 Reviewed by PAMELA RODRIGUEZ  Fact checked by PETE RATHBURN

A house. A vacation. A thousand dollars a day for life. Who wouldn't want to win a huge prize? Actually, a lot of people—once they realize these jackpots aren't free because most prize winnings are taxed as income by the Internal Revenue Service (IRS).  And what happens when you win the lottery? Taxes and financial missteps can quickly turn some windfalls into major burdens.

Before we lay out details of the lottery win process, here are some common prizes that perhaps we've all dreamed of winning and the often overlooked costs to keep them.

KEY TAKEAWAYS

You are taxed on anything you win, whether it's cash, an item, a trip, or a service.

Winnings are subject to federal and state income taxes.

Most tangible prizes like cars and homes are taxed at their fair market value.

Lottery winnings are taxed for the year in which they are collected, allowing winners who choose annuities to spread out the tax bill.

If you win a house, boat, or car, prepare to pay for their upkeep.

The Cost of Winning a House

After winning a home, you'll be responsible for paying the federal income tax based on the home's value. You may also be liable for state income tax, depending on your state of residence. As with any prize, the home's fair market value must be reported on Form 1040 as other income, and will be taxed at your marginal income tax rate.

Unless they already own a home that they plan to sell, many people couldn't afford to pay such a significant tax sum all at once, even with several months' notice. Furthermore, consider that homes given away as prizes are worth more than $500,000 and located in expensive areas.

Of course, if you could afford the tax bill, you'd be getting a home for the price of a generous down payment. But your costs wouldn't end there. On top of income taxes, you would also have higher recurring expenses such as property taxes, homeowner's insurance, and utility bills, not to mention the cost of general maintenance and upkeep. Despite striking it rich in the sweepstakes, you could end up house poor in the end.

 You must report any and all of your winnings to the IRS regardless of their value.

A Brand New Car

Just as with that prize of a home, you'll be responsible for federal and state income taxes on any cars that you win. These amounts will be based on the vehicle's fair market value and the combined federal and state bill might add up to about one-third of the car's value.

This may not be so bad if you win a $15,000 Ford Fiesta—you get a brand new car by paying $5,000 to the IRS. But if you win a sports car that retails for over $100,000, the tax bill would be proportionately higher. Since the cars that are given away as prizes are often luxury models, the new wheels could boost your reported taxable income quite a bit, maybe even into a new bracket taxed at a higher marginal rate.

Don't forget that you'll have to pay registration and licensing fees in order to get that car on the road. Then there are the ongoing costs associated with auto ownership. You can bet that costs for insurance premiums and maintenance are higher for a more expensive car. Oil changes on the cheapest Ferrari are pricey. And your shiny new 500-horsepower bullet probably doesn't get gas mileage that could rival your previous ride's.

A Vacation

To continue reading, please go to the original article here:

https://www.investopedia.com/managing-wealth/winning-jackpot-dream-nightmare/?utm_campaign=quote-yahoo&utm_source=yahoo&utm_medium=referral

Wealth Transfers: 5 Unexpected Obstacles To Plan for Before It’s Too Late

Wealth Transfers: 5 Unexpected Obstacles To Plan for Before It’s Too Late

Heather Taylor   Wed, May 31, 2023

Are you planning to leave an inheritance or transfer your wealth? It’s important to avoid making mistakes that may create serious issues and complications for your family.

Lack of Preparation

One of the most common mistakes in transferring wealth is a lack of preparation.

Julie Virta, senior financial advisor at Vanguard, said many individuals push legacy planning off due to difficult emotions that might arise from envisioning your own death. However, continuing to push this planning off each day can deter the proper execution of your goals and wishes. This is especially true if you die before your plan is in place.

Virta recommends creating a legacy plan as soon as possible. A legacy plan should be established with a financial advisor, an estate planning lawyer and a tax expert.

Failure to Communicate

It is not enough to create a legacy plan. This plan must be communicated with all beneficiaries and relevant stakeholders. Communication sets expectations about the inheritance and clearly defines the roles of those involved, Virta said. If there isn’t any clear communication, it can easily cause confusion or even a rift or conflict among all involved in the wealth transfer.

To facilitate clear communication, Virta recommends setting up regular meetings with your partner, family and other beneficiaries. These meetings can help ensure all are aligned on your financial situation, long-term goals and preparations for the unexpected.

Not Looping in Beneficiaries

Some beneficiaries might not know much about the current state of your finances. If they are completely in the dark, Virta said, it can be good to make them privy to your existing accounts and to introduce them to your financial advisor and any other professionals you work alongside.

Remember: Those transferring wealth are allowed to share information at the level of detail where they’re most comfortable.

Not Considering Tax Implications

The value of an inheritance can significantly be impacted by taxes.

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/wealth-transfers-5-unexpected-obstacles-161650951.html