The IRS Deductions Blog

Posts Tagged ‘income’

Question: Need $30K 4 home improvement. Credit card at 5% for life or HELOC at 8.5%? I’d pay off either loan in 5 years.

I did some calculating. If I use my credit card, I would have paid $3,970 in finance charges over the term of the loan. If I use the HELOC, I would have paid $6,930 in interest over the life of the loan. Based on my tax bracket, I would gain about 25% of the HELOC interest as deductions, thus the only interest that I would have paid with the HELOC is $5,198.

Everyone keeps telling me that the HELOC is the way to go, as it is tax deductible, but I can’t seem to justify the numbers. Any suggestions out there?

Answer: Let’s start with the basic principles. Make an appointment with your Banker and have them work out the numbers. Remember ANY time you make an investment or improvement to a real estate property it will appreciate and thats a good investment. Your’re rigjht HELOC interest is tax deductible and that makes good sense as your friends have mentioned above. Why NOT let your Home Equity fund your home improvement versus paying a debt to a Credit Card company? Just a suggestion. Good Luck!

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Personal Financial Planning Tips : How to Build an Emergency Cash Fund

Question: Help with claiming for tax Deductible Expenses?

Hi,
I’m an NHS junior doctor, working in the UK , and I’m trying to apply for tax deductible expenses. I have no experience in money / tax related matters, and in terms of documentation, I have most (but not all) of my payslips as well as some P60 and P45 forms from various Hospitals I have worked in I have heard that this can be done by myself rather that pay for an accountant to do this.. Is this true? Would an accountant be able to get me more money (even though this may be offset by their fees) since they know exactly what they are doing and I’m essentially doing this for the first time from scratch?
I’m hoping to include professional medical examinations, revision courses, revision materials (books and DVDs) as well as a personal computer in my expenses (the use of a PC is essential for me as I need to store on it medical training data). Any tips to help me make a good case for my expenses would greatly be appreciated. Many thanks for your help and guidance.

Answer: I’d recommend using an accountant.
Professional examination costs are not deductible.

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Quicken Rental Property Manager 2011 – [Old Version] $59.96 It shows how your rental properties are doing and where you’re spending at a glance. The Intuit Quicken Rental Property Manager 2011 Software identifies tax-deductible rental property expenses so you can maximize your tax deductions. It shows which rents have been paid so you know who owes you money and stores lease terms, rental rates and security deposits for each tenant….

The Tax-Deductible Wedding: More Wedding and Fun, Less Fret and Debt $4.23 Practical advice for producing your dream wedding at tax-deductible costs….

Song for Haiti (Mad World for Haiti Earthquake Relief) covered by Gersing Aung – a Burmese vocalist

Question: 2010 Tax return question?

I’m filing 2010 return as joint return. My standard deduction is greater than Itemized deduction.

I have quick questions
1> The amount i pay for Toll Roads, will that go into Itemized deduction or somweher else in Credit?
2>When i filed my 2009 tax returns in 2010, i owed $874 to IRS and paid those to IRS in March 2010. Can i add/Claim that amount now. How?

Answer: No and no.

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TurboTax Home & Business Federal + State + Federal efile 2009 $42.89 TURBOTAX HOME & BUSINESS WITH…

Question: INVESTING AND RETIREMENT QUESTION! 10 pts! ?

A retiree has a nest egg of $50,000 that earns 5.5 percent per year,
compounded quarterly. If the nest egg is to be depleted to zero in 30 years, how much should be withdrawn each month?

a. $537
b. $340
c. $281
d. $230

The deductibility of contributions to a traditional IRA can be limited by:

a. age or adjusted gross income (AGI).
b. whether or not a person has earned income.
c. whether or not a spouse is covered by a retirement plan
atwork.
d. All of the above factors can limit the deductibility of
contributions to a traditional IRA.

If a contribution to a traditional IRA is not deductible:

a. there is no point in making the contribution because it will
not save any tax.
b. the contribution must be used for higher education expenses
if it is withdrawn before age 591h.
c. the income from the contribution will be compounded tax
deferred until the money is withdrawn.
d. it should be converted immediately to a Roth IRA.

Answer: 1-c, actually I calculated $274.89 per month
2-d
3-c

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Question: Can I itemize state taxes for the whole 2009 if I bought a house in November 2009?

My question is: If I itemize on my 2009 tax return for a house that I bought in November 2009, can I deduct the entire amount of state taxes (and donations) I paid in 2009 or only the fraction for the two months I owned the house in 2009? If the full amount cannot be deducted, the standard deduction of $5700 will be higher than my itemized items and I would not itemize.

More Details:
Closed on the house November 19th, 2009.
Total prepaid interest and property taxes: $4505
State Taxes paid in 2009: $6000
Donations made: $720

Thank you!

Answer: if what you can itemize is greater than the standard deduction, by all means itemize

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ItsDeductible Workbook for Tax Year 2005: The Blue Book for Donated Items $7.99 Every year, millions of Americans forfeit hundreds of dollars in legal tax savings simply because they underestimate the value of their charitable item donations. ItsDeductible, from the makers of TurboTax®, provides a simple solution to determining fair-market values. Updated annually, with assessments for over 1,000 categories, including jewelry, clothing, baby supplies, small appliances, exerc…

TurboTax Home & Business Federal + e-File + State 2010 – [Old Version] $8.07 Designed for sole proprietors, self-employed, consultants, 1099 contractors, and single-owner LLCs. Expanded interview walks you through entering business income and expenses to help you maximize business and personal deductions, home office deductions, depreciation and more. Create W-2 and 1099-MISC forms for your employees and contractors. The Intuit TurboTax Home & Business Tax Year 2010 Softwa…

TurboTax Home & Business Federal + State + Federal efile 2009 $42.89 TURBOTAX HOME & BUSINESS WITH…

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Car Donation To Charity = Car Donation Tax Deduction, Unless…