The IRS Deductions Blog

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Question: What are other options do you have besides a Hospital while giving birth?

My husband and I are Working on baby number one.
We have Great Health Insurance from the Blue Care Network.
We have a Zero Deductible and a 10 dollar Co-Pay.

I want to have a Safe but Happy delivery. The idea of laying on my back for 24 hours is not exactly what I expect when I am giving birth.
I want more of a family atmosphere

I don’t want a Home delivery birth but I do want something other then a hospital.

Answer: There are birthing centers all over the place. A lot of insurance companies do cover them. They’ll make you much more comfortable. Maybe you could even try a water birth.

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Question: What is the difference between a 401 IRA and a 403 IRA? Is there a tax deductible IRA for the self employed?

If a person is considered self employed in a sales position and will receive a 1099, is there a tax deductible account you can invest in? Other than a Traditional IRA or Roth IRA with the fixed limit?

Answer: You would have to set up a retirement plan such as a SEP, SIMPLE, or solo 401k. These plans may have increased contribution limits. Contact a financial institution such as the large mutual fund families, and they will assist you in setting up such a plan.

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Question: Can IRS treat homes purchased for investment purposes as personal residences?

A taxpayer has 4 homes. The mortgage interest on homes 1 and 2 is deducted on Schedule A subject to the limitations. The additional interest paid above that allowable is personal interest. The taxpayer bought homes 3 and 4 strictly as investments due to the economic housing downturn. The houses are not rentals nor does the taxpayer live there or spend any time there. He is deducting investment interest expense only up to the amount of his investment income which is $15,000. The remainder is being carried forward. The IRS claims the interest on homes 3 and 4 is non-deductible personal interest and not investment interest. I cannot find anything on point in either Court Cases, Pubs, the Code or the Regs. Has anyone out there seen this issue and can you guide me to where I can find support for homes 3 and 4 being investment properties?

Answer: IRS treats them they way the taxpayer treats them regardless of what the taxpayer says.

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Every Landlord’s Tax Deduction Guide (2nd Edition) $34.99 This bestseller is the only book on tax deductions specifically for residential landlords! If you own rental property, you should be taking advantage of the many tax write-offs available. Every Landlord’s Tax Deduction Guide gives residential landlords the plain-English guide they need to save money on taxes — without the services of a high-priced accounting firm. This book explains how to ma…

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Question: Cashed savings bonds taxed as income if I used it for tuition?

In May 2006 I cashed in about $950 worth of savings bonds some family gave me when I was young (27-30 years ago).

I took this money and put it in my checking account and immediately used the proceeds (and then some…) to pay off my outstanding college tuition bill.

Do I need to pay income taxes on this amount? Because the bank sent me an income statement for the $950 and the school has sent me nothing. I know that higher education tuition is normally tax deductible for an unlimited number of years, which is different than when I first started college.

Thanks!

Answer: You will have to pay the interest on the savings bonds because you can not exclude them for FEDERAL taxes because you were under 24 when they were issued to you. However, you can write off some of the school expenses (tuition and fees) with either a Hope Credit, Lifetime Learning Credit, or Tuition and Fees Deduction.

You should not report the bond interest on your state tax return.

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