9/23/08 Tax News

Tax Credit really a loan

There has been a misconception about the $7500 first time home buyer credit. Yes it is a credit on your tax return from the year in which you purchased the home, but the credit must be paid back over the next 15 years in equal installments.

For example, a $7500 tax credit would result in an additional tax payment of $500 a year.

When calculating your costs of buying your new home, do figure in the $7500 credit, but also add in the $500 repayment.

8/3/08 Tax News

First Time Home Buyers Have New Tax Incentive

The new housing bill just passed by congress has an interesting new tax credit for first time home buyers.

You will be eligible for an interest-free loan from the government in the way of a new $7,500 or 10 percent of the purchase price, which ever is smaller. This is a tax credit, which you will subtract from the money you would pay to the IRS. There are income qualifications, at $75,000 or $150,000 for married filing jointly it begins to phase out.

The tax credit must be paid back over the next 15 years in equal amounts on your federal taxes. That is what makes this more like a loan. The credit is also retroactive to homes purchased since April 9th and will continue through June 30, 2009.

4/28/08 Tax News

Economic Stimulus Payments on the Way; Some People Will See Direct Deposit Payments Soon

The Internal Revenue Service has begun to transfer economic stimulus payments to millions of Americans, some of whom will see payments in their bank accounts as early as today.

The IRS will issue payments of up to $600 ($1,200 for married couples) plus $300 for eligible children younger than 17, throughout the spring and summer. The first wave of payments will go to people who opted for direct deposit on their 2007 income tax returns.

“People who chose direct deposit will receive their economic stimulus payments the quickest,” IRS Commissioner Doug Shulman said. “We know there are many people who are eligible for an economic stimulus payment who have not filed a tax return. If you think you may be eligible, even if you don’t normally file a tax return, please check it out. And, use direct deposit to get your payment faster.”
Internal Revenue Service April 28, 2008

4/23/08 Tax News

What To Do With All That Stimulus?

1) PAY DOWN BILLS!
The number one, smartest thing to do with your money is get rid of debt. Just figure out how much your investment income, savings account, cd, etc. would have to grow to equal the rate on your credit card or other loans. Now, what makes more sense?

2) SAVE
Do you have your 3-6 month income cash flow saved? Emergency can throw your entire plan awry. Put that money aside to cover that car breakdown, fridge on the fritz, sudden swing set accident. Check out the best rates for your cash in a money market, cd or savings account.

3) MORE HOMEOWNERS INSURANCE
When was the last time you called your agent for an update? Is your insurance keeping up with the value of your home? Done any remodeling? Call now.

4) A LITTLE DOSE OF CURB APPEAL
Even if you aren't thinking of selling your home, a little curb appeal could make your home and your entire neighborhood more enticing. Help out that couple down the street with their house on the market. Making your neighborhood more inviting helps everyone and makes you darn proud to come home.

5) FIGHT THE WINTER STUFFINESS
Open the windows and let the sun (and fresh air) in. For some reason cleaning in the spring doesn't seem nearly as arduous as cleaning any other time. Perhaps it is just the feel of releasing all of those cooped up dust bunnies makes our day.

4/11/08 Tax News

Countdown

Are you ready for April 15th? Owning a home is most people's largest deduction. It is a great reason to buy today.

Mortgage Forgiveness Debt Relief Act of 2007

This Act created a three-year window for homeowners to refinance their mortgage and pay no taxes on any debt forgiveness that they receive. Under past law, if the value of your house declines, and your bank or lender forgives a portion of your mortgage, the tax code treats the amount forgiven as income that can be taxed. You would have had to file a 1099 and claim the amount the company forgave as income.

3/22/08 Tax News

Plan now and you’ll be in a better position to know what you’ll owe Uncle Sam this time next year.

1. More money for gas. The standard mileage deduction for business increases to 50.5 cents per mile. Note that mileage rates for medical or moving purposes fall to 19 cents per mile.

2. More money for retirement. You can contribute $5,000 to your IRA ($6,000 if you’re over 50) in 2008.

3. No breaks for sales taxes. The provision permitting taxpayers to deduct state sales taxes — a big plus in states with no income tax — expired at the end of 2007.

4. More tax breaks for retirement savings. Married taxpayers with joint income of up to $85,000 will be able to deduct IRA contributions if they file jointly; individuals with income of up to $53,000 can take the deduction.

5. Higher standard deduction. If you’re one of the twothirds of taxpayers who don’t itemize, you’ll be able to deduct $10,900 as a married couple filing jointly ($5,450 for singles) in 2008.

6. No tax on some capital gains. Joint filers whose taxable income doesn’t exceed $65,100 and single filers with income that doesn’t exceed $32,550 don’t have to pay any tax on capital gains they realize in 2008; the rate for other taxpayers remains at 15 percent.

7. More time to sell a house when you lose a spouse. Taxpayers who lose a spouse now have up to two years after that death to take the maximum exclusion of $500,000 in gain on the sale of a principal residence. The other requirements for the exclusion must have been met before the death.

8. Less money back for some hybrid cars. While buying a hybrid car can still save you taxes, the tax credit has been phased out on many popular models such as the Toyota Prius. Check out the 2008 Model Year Hybrid List at www.irs.gov before you buy.

9. Tougher taxes for kids. Children 18 and under or fulltime students up to 24 years old will pay taxes at their parents’ tax rate for investment income over $1,700. Note that this rate doesn’t apply to wages a child earns.

10. Higher cutoffs for Social Security. The maximum amount of earnings subject to Social Security tax increases to $102,000 in 2008.

2/15/08 Tax News

When you sell your primary residence, you can make up to $250,000 in profit if you're a single owner, twice that if you're married, and not owe any capital gains taxes.

Some sellers are surprised by this break, especially if they've been in their homes for a while. That's because before May 7, 1997, the only way you could avoid paying taxes on your home-sale profit was to use the money to buy another, more-expensive house within two years. Sellers age 55 or older had one other option. They could take a once-in-a-lifetime tax exemption of up to $125,000 in profits. And in all instances, there was tax paperwork (Form 2119) to fill out to show that you followed the rules.

But when the Taxpayer Relief Act of 1997 became law, the home-sale tax burden eased for millions of residential taxpayers. The rollover or once-in-a-lifetime options were replaced with the current per-sale exclusion amounts.
Read More http://www.bankrate.com/brm/news/real-estate/20041018a1.asp