If you are ready to purchase your dream home, a careful tax analysis about different types of mortgages must be done. If you want to know about big tax write-off a mortgage can give you, you should learn how mortgages work and then sit down with a tax advisor or an accountant and determined whether a 30-year mortgage is better or worse for you than the 15-year mortgage. This task might be confusing and you need to make sure you have a clear picture and help from your tax accountant. You can use mortgage calculators to compute the monthly payments on a 30 years or 15 years mortgages. This tool will help you budget your personal expenses and you will see how much the monthly payment will be on your new mortgage.

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The interest that you pay on your home mortgage loans is a very important factor in your financial tax strategy. The good thing about mortgage loan is that mortgage interest may be tax deductible. This is one of the popular tax deductions that you, the taxpayers, look forward to. However, you must adhere to some rules so as to get the benefit of mortgage interest tax deduction. As the mortgage holder, you must fulfill requirements of filling out form 1040 with a schedule A. Schedule A allows you to itemize or in other words deduct your mortgage interest. The person, who is filing for the tax deduction, must be the owner of the property. No you don’t need to be an owner of the mortgage; you need to be an owner of the property. (It is not required in every case for you to have a true debtor-creditor relationship with your lender to take the mortgage interest deduction. Title 26 Code of Federal Regulations section 1.163-1(b) provides, quote “interest paid by the taxpayer on a mortgage upon real estate of which he is the legal or equitable owner, even though the taxpayer is not directly liable upon the bond or note secured by such mortgage, may be deducted as interest on his indebtedness.”) The mortgage interest paid paid on your primary or secondary homes is reported by the lender on form 1098.

There are several types of interest on mortgages which may be tax deductible. It include: the interest amount that you paid on loans to purchase a home, home equity lines of credit, and construction loans. However, there is a limit to the amount of deduction on some loans i.e. Home Equity Line of Credit. Interest that you pay on your third and fourth homes is not tax deductible.

Mortgage interest payment is very popular tool to receive a significant tax benefit. There are mainly two types of mortgage interest payments which are used for tax deduction, acquisition debt and equity mortgage. In the acquisition debt, the mortgage interest is paid to purchase a new home, build a new home or to remodel a home. Interests on these types of mortgages qualify for tax deductions. Equity mortgages are the mortgages where you use your equity in your home so as to obtain the equity mortgage loan. Per current tax regulations you can deduct the first 1.1 million in qualified home mortgage indebtedness and/or 100K in home equity line of credit.

 

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If you are thinking or already attending a college, university or a graduate school, then you should know about several educational tax credits that you can claim on your personal income tax return.  If you are a dependent, your parent(s) can claim those credits on their personal income tax return. This article addresses The American Opportunity Credit.

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If you send your kid(s) to a summer camp(s) or day care facility, you might be able to deduct those costs by claiming dependent care expense tax credit.  Because you and your spouse work or are looking for work, you must arrange to care for your child(ren) under 13 years of age during the school vacation.  So camp might be a good tax deduction for you.  You can claim the child and dependent care expense credit on your personal income tax return.  Here are few facts that you should know about this tax credit.

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Do you have an IRA or an employer sponsored retirement plan such as: 401-K, 403-B, 457, DB, Profit Sharing Plan, or other qualified retirement plans?  Did you purchase a non-qualified annuity to protect your retirement assets?  If the answer is yes, then you should know what would happen tax-wise, if you take the money out early (taking premature distribution)?  In most cases withdrawing funds early out of a retirement plan or an IRA before 59 ½, is called “an early distribution”. 

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Capital Gains and Losses are recognized when you sell or dispose of an asset (property, stock, bonds, other securities, collectables, etc.)  Here are some facts you should know about capital gains and losses.

• When you sell a capital asset, you should know the original price.  It also referred to as “basis”.  The difference between the amounts you sold it for and your basis is the capital gain or capital loss.  So let’s say you purchased a stock XYZ for $25 (basis) and sold it for $45, you now have $20 of capital gain ($45-$25)

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If you have already filed your individual or business income tax returns and discovered that you made a mistake, or you forgot to add a dependent, or your accountant or a tax advisor missed a tax deduction, or reported wrong taxable income, or you need to make any other adjustments to the taxes; you should file an amended tax return Form 1040X*.  Amending taxes is a complex issue and it’s recommended to seek professional tax help from an accountant, CPA or a tax advisor to help you with the tax changes or corrections.  Here are few important facts you should know about correcting your already filed personal taxes.

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If you are living and working abroad you may be entitled to the Foreign Earned Income Exclusion.  The foreign earned income exclusion is adjusted annually for inflation.  For 2009, you can exclude from the U.S. taxes the maximum annual amount of up to $91,400 per qualifying person.  The foreign exclusion is not a simple tax matter and it’s recommended to seek professional help from an accountant, CPA or a tax adviser.  You must have documentation that you can produce to evidence your qualification for the foreign earned income exclusion.  Here are few important facts that you should know:

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 This material was prepared by TaxBizPro, LLC ©: 2010 Have you spent money to care for your child(ren), or a dependent, or perhaps you are ...

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 This material was prepared by TaxBizPro, LLC ©: 2010 If you would like to contribute to a qualified retirement plans such as 401-K, 403-B,...

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If your mortgage debt is partly or entirely forgiven during tax years 2007 through 2012, you may be able to claim a special tax relief and exclude the debt forgiven from your income.  Here are some facts on this.

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  This material was prepared by TaxBizPro, LLC ©: 2010 Many clients ask us what to do if their employer did not provide them with the ...

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This material was prepared by TaxBizPro, LLC ©: 2010  Do you need to obtain a copy of filed federal tax return from the...

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 This material was prepared by TaxBizPro, LLC ©: 2010  If you have children, consider these important tax benefits available to you. ...

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This material was prepared by TaxBizPro, LLC ©: 2009  If you are filing an income tax return, you must know which filing status applies to ...

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This material was prepared by TaxBizPro, LLC ©: 2009 There are three individual tax return forms you can use to file your Federal Income Taxes. ...

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The following are the amounts that are exempt from Federal Estate Tax.

In 2005: First $1,500,000 in assets
In 2006-2008: First $2,000,000 in assets
In 2009: First $3,500,000 in assets
In 2010: First 1,000,000 in assets
In 2011-?: First 1,000,000 in assets

If your assets (Real Estate, IRAs, Life Insurance, Savings Accounts, CD, Stocks, Bonds and any other Investments or Properties) exceed the exemption amounts above, then for every dollar more than the exemption, the Uncle Sam will take following persentages:

Federal Estate Tax Rates
2005: 47 %
2006: 46 %
2007- 2009: 45 %
2010: No Estate Tax
2011-?: 55%

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This material is copyrighted and any distribution without permission would be in violation of copyright laws. This material was written and prepared ...

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Here are some important facts you need to know before deducting charitable donations/contributions. Note that in order to deduct charitable contr...

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With today’s technology many people can run and operate a business out of their homes. Many clients may be able to take a home office tax de...

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Many clients ask me what they can deduct and what they can’t deduct? So I am providing the following lists of NON deductible expenses: Expenses ...

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Many clients ask me what they can deduct and what they can’t deduct? So I am providing lists of possible deductions. The lists are only mean...

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