The IRS Deductions Blog

Archive for September, 2009

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If you are one of so many Americans who has fallen victim to the economic recession and is finding it harder and harder to pay your monthly mortgage? If you are, you should make an appointment with a financial advisor who can go over the pros and cons of home loan modification versus FHA refinancing.

There are two options available for homeowners who cannot pay their mortgage loans. They are a loan modification and FHA refinancing. The one you choose depends mainly on who insures your loan. If you don’t know, call your lender and ask. There are three main insurers: Freddie Mac, Fannie Mae, and the Federal Housing Administration (FHA). These companies do not lend you money; they insure it. This means lenders have less of a risk and subsequently will offer you a lower interest rate.

Is there a difference between insurers? Not really. The determining factor is your specific loan and who insures it. There isn’t much difference between a mortgage insured by FHA and a loan insured by Fannie Mae or Freddie Mac. The insurer only really matters when restructuring enters the picture. Loans insured by Fannie Mae or Freddie Mac can participate in the new Making Home Affordable mortgage loan modifications. If the FHA insures the loan, refinancing is available through Hope for Homeowners plan.

With a FHA loan, the homeowner should investigate refinancing. The Hope for Homeowners initiative offers hope to homeowners who have been denied refinancing in the past. Lower property values have disqualified many people from refinancing. When a house loses value, it loses equity. If equity had dropped 20%, homeowners were not eligible for traditional refinancing.

There is a standard procedure for lowering your monthly mortgage payments through a Making Home Affordable loan modification plan. There are incentive payments for both lenders and borrowers that will help lead to favorable loan modification and encourage economic stability. If you have a FHA insured loan, you can get a home modification but not through the Making Home Affordable plan. The programs that deal with FHA loan modifications are not as straight forward, strict and they do not follow the same procedures.

It is not hard to understand the differences between loan modifications and FHA refinancing if you have the right information. Research it and talk to a financial advisor about reducing

Items on Amazon Right Now for Difference Between Deductible Self Insured Retention:

Robert Peston

The Treasury may in fact get billions from bonus tax

Question: Overseas property mortgage interest deduction.?

I have a second home in India on mortgage. Can I deduct my mortgage interest on my US tax return.
If I rent the house, do I need to treat it as rental as I do for any rental in US?

Answer: You should probably speak with a tax attorney or an accountant to make sure you follow federal guidelines.

Items on Amazon Right Now for Tax Deduction Mortgage Interest Second Home:

Mortgage Premium Insurance

Understanding morgages and insurance is difficult at best. This article will explore the meaning of mortgage insurance as well as a discussion about mortgage Insurance Tax Deductions for 2009/2010

“I’m Ready… To Buy A New Home”

Question: Does anyone have a good reference for calculating basis in a partnership?

I know the basics, but I’m looking for more particular items.
For example, do guaranteed payments, deductions related to portfolio income, other deductions, foreign taxes, or other credits affect basis?

Answer: The AICPA Tax Section publishes a CD-ROM called ‘Tax Practice Guides and Checklists’. If you’re a CPA and in the Tax Section, they send it to you for free every year. The guide has an S corp basis schedule and the rules are very similar.

Generally, any item on the K-1 that results in a decrease in the partnership’s net assets will result in a decrease in your basis. Portfolio deductions, other deductions, foreign taxes, and credits all reduce basis, as do nondeductible expenses (like the other 50% of meals and entertainment). Guaranteed payments do not increase basis – although the partner recognized income, they also received a corresponding amount of cash that does not get separately reported as a distribution.

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Running a farm

My husband and I operate a small farm as a partnership. What amount would we have to turn over before we can claim any tax deductions against our individual taxation claims?

Tax Advantaged and RRSP eligible Real Estate

Let’s face it. Christmas gifts can be down right boring sometimes. Some givers get stuck in a rut of buying the same thing for the same person every single year. While the person may actually like the gift they’re getting, the giver is certainly playing it safe by not even trying to come up with an original idea. Eventually, this mundane sameness will lead to the recipient devaluing that gift because there’s just nothing to get worked up about.

On the other hand, finding that perfect unique gift for someone isn’t necessarily all that easy, either. Probably why many people take the easy way out. However, if you want your gift to stand out from the crowd and really be appreciated, you need to find something truly unique. Now unique can mean different things to different people. There are two types of unique Christmas gift ideas(cheap wow items).

The first type of unique gift idea is to find something that is familiar to the person. Pick a certain category, then find a unique item that you’re sure they’ll like in that same category. Say, for instance, your recipient likes cologne. Okay, you know they like a certain brand of cologne, but, there’s this new brand that you’ve smelled and it has kind of a funky, exotic scent that you just know this person will love. Because this person likes to wear a lot of cologne and is open minded, you know he’ll enjoy receiving something unique that he’s never worn before.

Another example of this is if you have a friend who loves to watch old black and white movies. They are constantly talking about this great old movie they saw the other night. Okay, so you think to yourself about what you can give this person that relates to old movies. Since you’re not too familiar with old movies, you don’t want to try picking a DVD – they may hate your choice. Instead, you decide to give them a beautiful coffee table book that features old movie stars from the past. The book gives extensive history on each star and has stunning photos. This is a unique gift that your friend will appreciate because they’ll recognize many of the stars.

The second type of unique gift idea is the “complete surprise” wow items. This gift could be anything from a fun, novelty item, to tickets to a Broadway show. It’s way more risky than a familiar category, but has a bigger “wow” factor. Many people buy these types of gifts without much thought to whether or not the recipient will actually like it. Usually, it’s something the gift giver likes and thinks is cool. Before you choose a gift item that has a big surprise factor, give a lot of thought to what THEY would enjoy.

If you’re picking out a unique novelty item to give someone, make sure they will find the humor in it, or enjoy its fun factor. The last thing you want is for someone to open your gift and go: What is this thing, and what am I supposed to do with it? These types of gifts usually end up being re-gifted, or wow gears being sold at a garage sale for $1. In addition to that, the person may associate you with being an awful gift picker. If you’re giving something unique like theatre tickets, a cruise trip or even dinner for two, make sure that the recipient actually wants to attend such an event, or go to this place. If they’re homebodies, then this will be a big waste of your money.

While there are plenty of unique Christmas gift ideas around, the most important thing is to make sure your unique gift perfectly matches the recipient’s taste and personality.

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Australia Announces Native Title Changes,

The Australian government has commenced a national consultation on the tax treatment of native title, including the interaction of native title, indigenous economic development and the tax system.

Business Financing & Rebate Certificates TV Interview with Sandra Noble

Question: I don’t Owe Taxes- Are Deductions for Student Loan Interest & Car Donation worthwhile?

OK the short of the question is that I made way below the cutoff in 2007 to owe any taxes on my return this year (About $11,000).

Answer: 1. Contrary to what rtfm wrote, moving expenses are an adjustment, not an itemized deduction, and may be claimed IN ADDITION TO the standard deduction.
2. Judy’s answer should say $11,000, not $11,00, but otherwise seems right.

Items on Amazon Right Now for Tax Deduction Auto Donation:

Year-end tax tips

There are only a few days left until 2010, but there are still a few things you can do to save money in 2009.

Charity Navigator’s Tax Tips: Valuing Car Donations