The IRS Deductions Blog

Archive for August, 2009

Question: I have high interest student loans…Need advice!?

Ok, so I’ve got about 4 private student loans through sallie mae totalling nearly $20,000, and a few federal loans totalling around $10,000.

Now I was a dumb college kid, and signed off 14.25% interest rates on 3 of private loans, and 1 at 11.25%. Over the past year alone I’ve acrued $1,300 is interest on the private loans, but the federal loans are subsidized, so no interest on them.

I have a few questions:

1)I’m still in school, so is the interest I accrue tax deductible while I’m in school?
2)When it comes time to consolidate, should I consolidate the private loans and federal loans together?
3)Is there any possible way to lower the interest rates on these private loans?

Basically I’m looking for advice on what would be the smartest thing to do. These loans are not in repayment yet, but I’d like to get things square before I owe a TON in interest.

If I’m screwed just tell me.

Answer: Sigh, you may be *screwed* on the Sallie Mae loans, unless Sallie May will renegotiate them with you for a better interest rate, since they apparently are alternative loans. You cannot consolidate alternative and federal loans together. That said, most lenders would rather work with you so that you don’t default on the loans. You may be able to roll these over into a new loan with a lower interest rate (rates are higher now than they were a few years ago, but even the alternatives have fairly attractive rates right now, certainly less than what you are paying now), so call Sallie Mae and ask to talk to a customer representative or their default prevention unit.

Then ask your federal lender about income contingent repayments so you can structure that debt appropriately, too.

Next I would hustle myself to a reputable credit counseling service and start looking at a program where getting out of this debt is paramount without incurring new debt, i.e. credit cards, new cars, etc. It sounds like you’ve woken up and smelled the coffee in time to prevent a major fiscal tragedy, though. Just take appropriate actions.

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Briefs – Dec. 30

Senior Meal every third Sunday at Clarinda Regional Health Center

High Risk Health Insurance Plans – Where to Get the Best Rate

Question: Is rent deductible? Also, do I have to pay taxes on Scholarships?

Student, Tax, Deductions

Answer: No, but some states have a very small credit for rent (usually around $100).

No, you don’t have to pay taxes on scholarships, but you can’t deduct the tuition they cover either.

Hope that helps. :0)

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Storehouse plans to move this month

A new year will mean a new home for the Community Storehouse of Martinsville and Henry County. The storehouse, which provides food and other items to needy area residents, will close its current site on Cleveland Avenue at the end of January.

In The Ghetto Elvis & Lisa Marie Presley (Original Video)

Question: What are some common Tax Deductions?

I recently bought a house, so I now itemize my tax returns. My finances are very simple. Can I write off student loan interest? medical expenses not covered by insurance? I do charitable donations, but am trying to get more creative. What about work clothes (suits)? Laptop (if I use it for work from time to time)?

Answer: The itemized schedule of deductions form will walk you through the possible deductions you can take. You can deduct interest paid on your home, but not other interest. You can deduct medical expenses that you paid out of pocket, but only to the extent that they exceed 7.5% of your adjusted gross income. Charitable donations are allowed. Work clothes are only deductible if they could only be worn in your job. (So most uniforms are deductible, regular clothing you could wear off the job is not deductible). Work expense, such as computer or home office has to be completely for work only in order to deduct. There are also some rather specific things, such as self-employed health insurance premiums, some student loan interest, certain qualifying child care expenses.

With a simple finance situation, you can easily do this by yourself if you read the instructions.

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Efforts increase to ensure accurate return preparation

During the 2010 tax filing season, the Internal Revenue Service will step up its efforts to ensure paid tax return preparers are assisting clients appropriately.

Question: Can somebody recommend a very good comprehensive health plan?

This is for my wife and myself 38 and 35yrs old, high deductible is OK including maternity and dental. Excellent clinic record. Have Blueshield right know but premium went $100 more just for reason of rate increase.

Answer: Aetna has a long track record of good dental plans if you can get it. Also see if you can get into a Dental DMO which is good if you don’t have any ongoing dental issues like you know you need a root canal, crowns, etc. Generally Dental DMO’s are less expensive and generally pay 100% for cleanings, x-rays, flouride treatments and other preventative care.

Bottom line though your decision should be based not on what it costs you but what it pays out based on your dental needs. What I mean is if your $100 increase covers 80% of a $2500 root canal and crown you know you need than it’s worth the increrase. If you are not in this position shop less expensive options.

Most important to do is, get a copy of the payment schedule and policy and review it with you benefits coordinator or insurance agent a see if it or which is the right plan for you.

Important note…big dental procedures are very expensive and time consuming. Preventative and regular dental visits and cleanings can save a lot of money and pain.

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Community Calendar

Deadline for items for the Community Calendar is Wednesday noon two weeks before desired publication date.

A Denver mortgage home equity loan is a loan calculated using the current value of your home less the value of the mortgage loan you obtained to finance it in the first place. Basically this means that you have access to the value of your home, which will have appreciated since you first obtained your mortgage and your home. While this may be an easy way to get your hands on some spare cash, you should really have a good reason taking out such a loan and you should only use the money for matters that are extremely urgent.

With a Denver mortgage home equity loan, you can take out a loan consisting of a lump sum available to you at a fixed interest rate. Just like a regular mortgage loan, you will have to pay monthly interest payments, but it is likely that the interest rate for your Denver, Colorado mortgage home equity loan will be much higher than the interest rate of your original mortgage. This is because a Colorado mortgage home equity is considered to be much riskier than a regular mortgage, since you already have another loan that you are still in the process of servicing. You will most probably already have to pay certain fees in order to obtain this loan.

In order to justify taking out a new mortgage home equity loan, you will need some very convincing reasons for it. Being in debt is never a good thing, and if you already have one mortgage, you should only take out another if you really have urgent need of the money. One good reason that you might need to take out a Denver mortgage home equity loan is if you have a large credit card bill that is about to rollover. Or perhaps your child is about to start attending college and you do not have the necessary funds to send him or her to college.

If you take out a Colorado mortgage home equity loan, you may be able to solve your current financial problems, but you will need to work hard in order to make it a lasting solution. If you were unable to afford to pay your bills or send your kid to college in the first place, then this probably means that your previous lifestyle was not sustainable. You must be prepared to make changes to your lifestyle in order to afford the payments on your mortgages. If not, you will find yourself in an even worse position than you were before.

Of course, before you even think about heading down to the bank to take out your new mortgage, you need to do your homework first. There are several things you need to pay attention to. Of course, you first need to find out exactly how much money you need to solve your financial troubles. Then, you need to do the necessary calculations to determine if your home equity is enough to cover a loan for the amount that you require, and if you will be able to service the mortgage after you take it.

If, after you have done all the necessary calculations, you determine that you can service the mortgage if you take it, you can take a trip down to your local bank and obtain your mortgage home equity loan and solve your financial troubles.

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What financial resolutions are you recommending for 2010?

It’s a new year. Now is a good time to take steps to get your financial house in order. Area financial experts recommend several steps, starting with forming an investment strategy that you will stick to, paring down high-interest debt, planning for your retirement and, if possible, creating an emergency fund to cover at least three to six months of expenses. Members of the Financial Planning …

Mortgage break costs – are they tax deductible? for property investors?