The IRS Deductions Blog

Archive for June, 2009

Question: If I make my tax deductible 4,000 IRA contribution this tax year, will I also be able to put 4,000 in a ROTH?

Answer: No. The total contribution is $5000 (or $6000 if you are age 50 and above), no matter how many IRAs you have. If you put $4000 into a Traditional IRA, you can still put $1000 into your Roth IRA.

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FINANCIAL CORNER – Time to Make New Year’s Financial Resolutions

If you want to accomplish major milestones you may have envisioned you may need to set some New Year’s financial resolutions.

Tax Deduction Tips : Tax Deductions for Cash Contributions

Question: Can you deduct your Mortgage Interest off your Indiana state taxes?

I know you can deduct property taxes, but how about mortgage interest? If not, what is the tax incentive to buy versus rent? Renters can deduct up to $2500. If you’re married and file separately, that’s a $5000 deduction, yet the Property Tax Deduction only goes up to $2500 and a large percentage of homes in Indiana don’t pay that much in property taxes. For example, mine was only $1465 for the year.

Answer: I think you only get that deduction off of your Federal taxes but it is figured in when you report your income on the State taxes by asking for your adjusted gross income.

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Homeowners must file new form to retain homestead tax deduction

Indiana homeowners have 32 months to fill out and file the new homestead verification form. If they don’t, they could lose their homestead deduction beginning in 2013.

Golf Community

Question: Are you able to claim deduction on 2009 new car purchase if you do not itemize deductions?

The new stimulus has a provision for new car purchases. If we buy a new car this year, can we claim this on our taxes next year even if we don’t itemize our deductions? Also-does this work the same for pre-owned or certified pre-owned for does it have to be brand new? This year our standard deduction was way more than itemizing. Thanks for any help you can give me.

Answer: Here is a synopsis of the deduction:

•New car buyers. Purchasers of new cars and trucks will be allowed to deduct sales or excise taxes. This is an above-the-line deduction, so you don’t have to itemize to claim it.

The deduction is limited to sales tax on purchases of up to $49,500. The deduction phases out for single taxpayers with adjusted gross income of more than $125,000, and married taxpayers whose AGI exceeds $250,000.

The amount you save will depend on your state sales tax rate and the price of your car or truck. If your state imposes a 4% sales tax and your car costs $40,000, the deduction will reduce your adjusted gross income by $1,600, says tax publisher CCH.

The deduction is limited to car and truck purchases made between the date the bill becomes law and Dec. 31, says Tom Ochsenschlager, vice president of taxation for the American Institute of Certified Public Accountants. Congress “is trying to get people to buy cars right away,” he says.

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Tax Season: Now’s the Time to Get to Planning

December 20, 2009 (Tulsa World, Okla.) As if you weren’t already rushed enough with last-minute holiday shopping and general year-end busyness, here’s a little something extra to throw into the mix — tax planning.

New Car Tax Perks

Did you know that 80% of 62 year olds still have mortgage payments and that’s the single biggest reason why most people are unable to retire because they’re still managing that large mortgage debt. What if I could show that a biweekly mortgage program is one of the surest ways to ensure that you’re able to retire your mortgage when you want to retire. You see, by starting a biweekly payment plan on your mortgage today, you can literally change the course of your financial future and your ability to retire. I’m about to turn 40 and I discovered that I would be just shy of seventy years old when I paid my mortgage off and that is, if I stay in my current house and never refinance again or move. That was a dramatic thing for me to realize that it would be several years past the age that I wanted to retire if I can’t even retire sooner and I would’ve still been making payments on my mortgage. You know, I tried my own do-it-yourself program for eight years, shamefully, I have to admit to you that it didn’t work. I just wasn’t consistent enough with my plan. Imagine having a third party manage your program for you and yes, your money is completely safe and fully insured, but the program goes on and on, out of sight, out of mind just like your 401k.

Every other week, they withdraw half of your mortgage payment, make sure that your monthly payments are made directly to your lender in a timely fashion and apply the extra payments to your principal, eliminating five to seven or more years off of your mortgage. We can even show you how adding just a few extra dollars per month can knock up to ten years off of your mortgage. I’ve got to ask you, would that help? When considering what my Social Security check would be, even if Social Security is around at my age, my mortgage payment would take quite a bit of that money and utilities, groceries, there wouldn’t be much left. No money for medical or prescriptions, car repairs, home maintenance or any other normal expenses that might come up. This was so disturbing to me that I had to take immediate action and started by finding a third party biweekly program for myself. Don’t be in the position that so many Americans are in. Make a positive change today and enroll in your own automatic third party biweekly program! To get more information on biweekly mortgages including articles, more free videos, a free mortgage calculator, even a free biweekly guide or to learn how to start your biweekly mortgage program today, visit biweeklymortgagetips.com.

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Money-saving moves to make before the new year

DENVER – As the recession just began easing up, 2009 still meant tough economic times for many of us. But financial advisor Gary Wagner says it’s not too late to save yourself some money before January 1st.

MORTGAGE-FREEDOM.COM …. FAST PAYMENTS

Question: Can I claim unreimbursed expense from 2005, which I could not submit in 2005 tax returns,in 2006 tax returns ?

I incurred employee expense during business trip in the last quarter of 2005 and didn’t include it in 2005 returns as I was expecting the reimbursement. Since I didn’t get reimbursement for it , I would like to include it as ‘unreimbursed expenses’ in Itemized Deductions in 2006 tax returns. Is it allowed ?

Answer: Pull the 1040X form and ammend your taxes for 2005. That is the safest and easiest way to claim the expenses. I believe you can carry them forward onto 06 under certain circumstances, such as self employement (truckers).

Basically, most taxpayers are ‘cash’ basis, meaning they deal with expenses and income realized in the tax year only.

So ammend 05. Your refund will take a while.

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Jackson Hewitt(R) Weekly ‘Tax Time Tip’: Business Expenses May Add Up To Valuable Tax Deductions

Many taxpayers could hold onto more of their hard-earned dollars by simply taking advantage of all the tax deductions that are available to them. One often overlooked area is business expenses â whether employed or self-employed.  In this week’s “Tax Time Tip,” Jackson Hewitt Tax Service® reminds taxpayers of several work-related expenses that may be deductible on their annual tax returns. Â