The IRS Deductions Blog

Posts Tagged ‘tax’

Question: Should I mortgage my house or pay cash?

I’m just buying a modest townhouse for which I can use 25% of my savings to buy it outright without any financing costs. But I’ve had people making big cases about how the mortgage interests are tax deductible. But I don’t get it. If I pay $10,000 in interest, sure I can pay $3,000 less income tax. But I’d still have to pay $7,000 interest out of pocket. IMO, I’m better off paying cash. No? I’m not doing well on investing the stock mkt BTW.

Answer: Get the mortgage. Your calculations don’t include the following:

The mortgage improves your credit score
The mortgage makes your purchase a “leveraged purchase”
The mortgage deduction will enable you to itimize your deductions

One of the basic principles of investing is ” a dollar today is worth less than a dollar tomorrow” (due to inflation). In other words, pay off your mortgage with “less valuable” dollars.

Mortgage rates are around 5% to 5.5% now. You can do better investing.

As for the investing, the stock market is at record highs. If you aren;t doing well, I suggest you look into mutual funds. Fidelity has a group of mutual funds that are a fund if mutual funds. Call Fidelity and ask about the Freedom Funds.

If this doesn’t work out, you can always pay off your mortgage later.

Make sure the mortgage is Fixed Rate, no pay-off fees, and fully ammortized.

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Solid Results and Higher Dividend for COGECO Stemming From Continuous Growth in Canadian Cable Operations Despite a …

MONTREAL, QUEBEC– – Today, COGECO Inc. announced its financial results for the third quarter and first nine months of fiscal 2011, ended May 31, 2011.

Dolly Lenz on the Mortgage Interest Tax Deduction

Question: I live in NJ, If I buy ny 529, can I get tax deductible? or does NJ 529 has tax deductible?

Answer: New Jersey also has a 529 College savings plan. It would appear that the NJ plan may offer greater benefits than the NY plan. But you likely need to by the plan in the state in which you will be paying state income tax to get the greatest benefit.

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Cogeco Cable Posts Strong Results Stemming from Solid Growth in the Canadian Operations and Increases its Dividend …

MONTREAL, QUEBEC– – Today, Cogeco Cable Inc. announced its financial results for the third quarter and first nine months of fiscal 2011, ended May 31, 2011.

Recovery: Education Credits – Students

Question: Online calculator to optimize 2010 W4 withholdings?

My husband and I get back around $5,000 federal refund every year, and around $1,500 State, even though he already has a high number of exemptions (I have been home since having my baby last year and am only making a small amount doing childcare). Between tithe to church, interest on our condo, property taxes, 401K, insurance and other deductions, 40% of his income is gone before we touch it (another 25% to federal, state, etc. taxes).

I’m hoping to optimize his W4 at the beginning of 2010, so we can have that money on a monthly basis, rather than letting the government earn interest off of our money until they refund it. The IRS has one for the remainder of 2009, but I can’t find one I can use to estimate the right number of exemptions for next year. Does anyone know of a website where I could put in forecast numbers to get an idea of the number of exemptions he should put?

Answer: You can adjust your W-4 any time during the year, so go ahead and use the current IRS calculator. When they update the calculator, re-run the numbers and adjust if needed.

Items on Amazon Right Now for Tax Deduction Calculator 2009:

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10 commandments of retirement planning

To arrive at the promised land of retirement flush with cash, follow these 10 commandments.

IRS-Deductions.org A Tax Deduction Guide To Reduce …

Question: what is the combined state and Fed tax rate for 2008 for married couple illinois?

If a married couple in illinois, filing as itemized for 2008, who owed the state approx 8 dollars, and got back from the fed approx 1400 dollars, and had an income gross at 45000, with an income adjusted gross the same amunt, with zero deductions, total taxable income of approx 34000, total tax of approx 900, total payments of approx 1010, and refunds of zero, what would their combined state and Federal tax rate be?

I am doing a mortgage calculator [how much i can afford] and I do not know what this amount is. I do have the 2008 return completed but cannot tell from it what the combined Fed and state rate is. Thanks.

Answer: Take the total tax lines from your state and federal returns. Add them together and divide by your gross income to get the combined net tax rate.

Mortgages are based upon your gross income so you don’t need your tax rate for figuring if you qualify for one.

BTW, if you are married filing jointly using the standard deduction with a gross income of $45k, your taxable income would be $27,100, not $34,000.

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SCOTT BURNS: Helping joint-return couples decide on retirement contributions

My wife and I are both teachers (13 years). I have a Roth ($8,500) with American Funds, which I stopped contributing to years ago. My wife also stopped years ago. We want to start contributing again. What percentage of our income should we put into these funds? Which one should we contribute to, or should we fund both?

Estimate My Tax Return Online for 2010, 2011

Question: how much would this plan typically run if I bought it on my own?

How much would I expect to pay for a plan like this: 1,000 deductible for hosp inpatient things, 20 to 60 dollar copays depending on whether its pcp, er, etc., then everything else is covered after that. I am 23 female, healthy, not overweight, non smoker, no conditions, no pregnancy any time soon. How much can I expect to pay for a plan for this? At work I pay 188 a month for this, for me, I think its high but I dont know, just not sure if you think I could get it cheaper at my own considering Im so young.

Answer: With no maternity benefits ever, you could expect to pay $150 to $200 a month in most states for this. Maternity, if you have it under your plan, is worth another $300 per month – you pretty much can’t buy it in most states anymore, except through a group policy.

So it sounds like your employer is kicking in about half, maybe more, if you have maternity coverage – but if you don’t want maternity, you could match what you’re paying on the private market. In most states.

The only way to know for sure, though, is to call a local agent and get some quotes.

“Someone” is way off base. The vast majority of her answers here in insurance, are flat out wrong. Insurance is still regulated on a state basis, not federal. And rates ARE different, in all states except NY, based on your age.

Items on Amazon Right Now for High Deductible Plan Pregnancy:

Health Reform and Insurance Industry Oversight (04/30/2010 Web chat)