The IRS Deductions Blog

Posts Tagged ‘interest_loan’

Question: Turbo Tax Worthwhile for Standard Deduction?

Would it be worth it to buy Turbo Tax if I just claim the standard deduction? Also, my dauther had a baby in Jan 07. She turned 18 in Feb 07. They both lived with us until July 2007. Can I claim them both? (She has no income so will not be filing any tax return).

Answer: Yes to turbo tax and yes your daughter and her baby are both your depend ants for 07. Happy holidays !

Items on Amazon Right Now for Standard Deduction Income Taxes:

Alimentation Couche-Tard announces its fourth quarter and fiscal 2010 results

Fiscal year

Tax Deduction Tips & Advice : How to Simplify Filing Federal Income Tax Return

Question: Turbo Tax Worthwhile for Standard Deduction?

Would it be worth it to buy Turbo Tax if I just claim the standard deduction? Also, my dauther had a baby in Jan 07. She turned 18 in Feb 07. They both lived with us until July 2007. Can I claim them both? (She has no income so will not be filing any tax return).

Answer: Yes to turbo tax and yes your daughter and her baby are both your depend ants for 07. Happy holidays !

Items on Amazon Right Now for Standard Deduction Income Tax:

First-time homebuyers still have time to claim a tax credit for 2009

Every year, the tax law changes as the government tinkers with deductions and income limits to force taxpayers to sharpen their pencils as April 15 approaches. Taxpayers will find several changes they should be aware of as they file a…

Let An IRS Tax Attorney Resolve Your Tax Related Issues

Question: Can you itemize your state taxes on your federal tax return?

I hear so much about how you won’t have enough to itemize to overcome the standard deduction if you don’t own a home.

However, I paid almost $4000 in state taxes in 2006, which is close to my standard deduction of $5150 (single). I’ve heard that you can itemize state taxes. Does that mean many people can have enough to itemize (using their state taxes) without owning a home?

Answer: Yes! you should try to use Schedule A to better the standard deduction. It requires digging through your records but could result in some savings. Re: state taxes — there was a last-minute change after the tax instruction booklets were printed (details in Publication 600 on IRS site). You can deduct either state AND local INCOME taxes OR state & local SALES taxes — but NOT both. Presume your $4,000 paid is income, not sales tax (unless you bought some REALLY expensive items and/or live in a high sales tax area). Now, what else can you deduct???

Under “Medical/Dental” you need to be able to show payments ‘more than usual’ — IRS decided that ‘more than usual’ is more than 7.5% of your “adjusted gross income” — see line 38 on Form 1040 (you can’t use 1040A or 1040EZ if you wish to itemize deductions and not take the standard deduction). If you pay for health insurance, those premiums should give you a good start on hitting the 7.5%. Then add in payments to doctors, dentists, prescriptions, etc. — you should have checks/credit card statements/cash receipts to document your costs. Another overlooked medical deduction is for travel to medical appointments — you get $0.18 per mile. It can add up to several hundred dollars if you travel some distance and/or have lots of appointments. When you gather paperwork for doc/dentist visits, make note of the number of visits to each. Then use Mapquest to find out the one-way mileage, double it, multiply by the number of visits and multiply by $0.18. If by chance, you also pay premiums for long-term care insurance, they’re deductible too (up to a limit, depending on your age — see page A-2 in the 1040 instructions).

Under “Gifts to Charity” you can deduct contributions to charities, church, United Way, college, etc. However, you must subtract the value of any ‘benefit’ you receive (e.g., you gave $50 to PBS, but got a CD valued at $12 — you can only deduct $38). Again, you’ll need to research your checkbook/credit card statements. You also get a mileage deduction for travel for volunteer work at such organizations — a lower amount, $0.14. It’s gotten much trickier to show contributions of “non-cash” — e.g. bags of clothing to Goodwill. Read up on this!

I’m not experienced with the “Job Expenses…” deduction, but like the “Medical…” your expenses must be ‘more than usual’ — this time it’s a lower number: 2% of your line 38.

Lastly, try to set a goal of bying a house as soon as you can. It’s the biggest and best investment for most people (NO, I’m not in real estate). B/c of the tax breaks you see on Schedule A, you can deduct all the mortgage interest you pay and the real estate taxes. Once you buy, you can have less tax taken out of your paycheck, which will give you a little more money to pay the mortgage. For example, if you take out $100,000 mortgage at 6% for 30 years, your monthly payment would be about $600. (NO sub-prime lender, pleazzzze). Of that, about $500 is interest — $6,000 a year. So if your line 38 is $50,000, you’re in a 25% tax bracket and that interest deduction makes for a $1,500 savings on taxes per year — $125 a month to help pay that mortgage. If your line 38 is $80,000, you’re in a 28% bracket and the same mortgage saves you $140 a month in taxes. Then, throw in real estate taxes — say $3,000 a year, and you pick up another $62-$70 per month. Together, that’s $187-$210 a month that you can lower your withholding and use the extra money in your paycheck to pay the mortgage. And that’s just the federal tax. If you also pay state/local taxes and the tax forms allow for mortgate/real estate tax deuctions, you’ll have savings there, too. Hope I’m being clear…

GOOD LUCK!

Items on Amazon Right Now for Standard Deduction Tax Return:

Beacon Hill Roll Call

Beacon Hill Roll Call has obtained the official list from the state treasurer’s office of the “per diem” travel, meals and lodging reimbursements collected by the 40 state senators in 2009. The list reveals that senators have collected a total of $90,502.

See how easy it is to file a return with TaxACT!

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IRS TAX TIPS – Eight Facts About Filing Status

Everyone who files a federal tax return must determine which filing status applies to them. It’s important you choose your correct filing status as it determines your standard deduction, the amount of tax you owe and ultimately, any refund owed to you. Here are eight facts about the five filing status options the IRS wants you to know in order to choose the correct filing status for your …

Bush in 2000, Palin in 2008

All of the major lenders are really getting up to speed with the Making Home Affordable (MHA) loan modification program. This is essentially a “Cash for Clunkers” program for distressed homeowners. If you think that you may qualify to trade in that clunker subprime loan or perhaps are facing future interest rate adjustments on a prime loan then the time to act is now.

This is an incredibly generous government program that can help homeowners adjust their mortgage payments to their financial situation rather than market conditions. A new home buyer with perfect credit, a large down payment and plenty of income might qualify for 5.5% on a 30 year fixed mortgage whereas a current homeowner with terrible credit, no equity and reduced income can qualify for as low as 2%. Hey, no one said life is fair.

There are many people who can benefit for the MHA program. Have you experienced a reduction in income? Has your mortgage rate adjusted up? Have you gotten so far behind that you can’t catch up but could make future payments at a lower rate if your loan was reset? Are you just in a really lousy subprime loan and would like something better? It is possible to seek a loan modification on your own directly with your lender or through a government counseling center. That should be easier to do but the fact is that it isn’t.

Many of my clients have tried to do it on their own and were frustrated. By all means don’t even consider paying anyone a large upfront fee to seek a loan modification on your behalf however, I do recommend that you consider using a real estate attorney that requires only a small retainer and charges for obtaining loan modifications and not just for applying for them. You can get a free online evaluation at www.illinoismortgagemods.com Whichever route you choose, the lenders for Making Home Affordable all have the same guidelines and will need to review the same documents.

Gather your 2008 federal tax return, last 30 days paystubs, last two months bank statements, be able to express your hardship in continuing your current mortgage payments. If you are self employed then the 2007 tax return may also be needed and a year to date profit & loss.

The website referred to above has a H&R tax preparer registered with the IRS on staff (In addition to a Real Estate Attorney) so preparing past due returns and a current profit & loss can be done quickly.

Items on Amazon Right Now for Standard Deduction Income Tax 2008:

Low inflaion leaves…

When it comes to inflation, 2009 was a good news/bad news kind of year – with a few mixed messages thrown in for good measure.