You may have better options when it comes to your mortgage tax deduction, and Turbo Tax 2014 can help you get the best advantage possible.
Turbo Tax 2014 guides you through the process of decreasing your taxable income, and you may come to a new decision about claiming your mortgage interest. Homeowners have differing ideas about carrying a balance or paying off their mortgages entirely, but the following example may help you make the right decision for you.
Q: I have the money to pay off my mortgage balance and still keep money in my emergency savings account. The interest rate on the savings account is low, and I wonder if losing my mortgage tax deduction will have a negative impact at tax time. I am confident in my daily financial decisions, and I make every effort to save for retirement. What do you think I should do?
Singletary: I think you should pay off the balance of your mortgage, but with the following considerations.
Think about the current state of your health, your job security, and your ability to obtain subsequent employment in light of the present economic climate. You might need your savings funds if you face a health or employment challenge, and accessing these funds would be much easier if they are not completely tied to your home equity. If you are comfortable with this scenario, then I would endorse your decision to pay off your mortgage.
Welcome to the January 22, 2013 edition of tax carnival ecstasy. In this edition we start off with an article from Bill Smith on the IRS delay in tax filing acceptance until the end of January, a delay caused by the late tax law changes passed by congress. There is also an article from John Schmoll who looks at 4 Helpful Free Investment Tools that you can use. Hope you like all the articles, tweet our carnival on Twitter, share with your friends, bookmark and come back next time.
Brian McKay presents Mortgage Debt Cancellation Relief Extended Until December 31, 2013 posted at Bank CD Rates, Mortgage Rates, Savings Rates, Banking Reviews, saying, “Homeowners facing a foreclosure, a short sale or reduced loan principal by their lender after December 31, 2012, faced owing taxes on any mortgage debt that was forgiven by the mortgage lien holder. Home owners had rushed to complete short sales or debt reduction before the end of the 2013 because it looked like the fiscal cliff tax issues wouldn’t be worked out in Washington.”
swapnil presents Share Market: Tax Structure in India posted at Share Market.
Bill Smith presents Free Tax Filing for 2011 Taxes posted at 2011 Tax, saying, “Each year, thousands of taxpayers fail to file their federal income taxes. Some individuals willingly forgo this action while others run into special circumstances.”
John Schmoll presents 4 Helpful Free Investment Tools posted at Frugal Rules, saying, “Investing in the stock market can be a challenge for the seasoned investor, much less a newbie investor. By using some free investment tools you can make more informed investment decisions that will benefit your portfolio.”
That concludes this edition. Submit your blog article to the next edition of tax carnival ecstasy using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.
Often when considering purchasing a home, one of the things that intrigues potential homeowner’s is the right to be able to claim mortgage tax deductions. There are a number of deductions that are available including interest payments, points and some closing costs. What is not always evident however, is what must be done in order to claim these deductions and when they might be most beneficial.
Prepare for additional paperwork
One of the first things that a taxpayer will need to do to take advantage of mortgage tax deductions is to prepare to itemize deductions. The most significant opportunities for deductions come in the early phases of a mortgage, especially during the first five years. This is because this is when the most interest is paid and also when a new home buyer can deduct points and closing costs. This will require filing a Form 1040 as well as a Schedule A for federal tax filings.
Understanding who can deduct interest payments
Interest payments can only be deducted by the person who is legally obligated to pay the mortgage. When a property is owned equally by two or more non-spousal taxpayers, each of them may claim one half of the interest payments on the mortgage. It is also critical to note that the mortgage company should have issued a Form 1098 with the full amount of interest paid and if this is the case, then copies should be attached to the tax returns.
Second homes and mortgage deductions
For a second home to qualify for tax deductions, the owner, or the person responsible for the mortgage, must have spent a specific number of days in the home throughout the year. In other cases, the Internal Revenue Service would qualify the property as a rental property and is subject to different tax laws. Homeowner’s who have second homes should review Publication 527 if they are confused about the rules.
There are numerous opportunities for a homeowner to take a tax deduction for their home mortgage payments and for specific events that may occur such as destruction of the home, repairs and remodeling and refinancing of the home. However, a homeowner must ensure that they carefully review all of the rules that apply to their individual circumstances. For example, while a primary home loan to purchase may be eligible to claim points, personal mortgage insurance and other costs as a tax deduction, a cash-out refinance may not be eligible for these tax deductions. Homeowner’s should carefully review Internal Revenue Service Publication 936 for information and if in doubt, always contact a qualified tax accountant who can help take the mystery out of mortgage tax deductions.
Visit the California Apartments Blog to get more tax and home improvement tips as well as new home builder reviews such as this Denver real estate for sale.
There are many tax breaks that get overlooked, but homeowners often overlook the most obvious deductions. The truth is, as a homeowner, you stand to save hundreds if not thousands off your taxes. However, it all boils down to knowing what you qualify for. The following are just some of the tax breaks homeowners may be missing out on.
The interest you pay on your mortgage should be one the first tax breaks you take advantage of. Those filing single can deduct mortgage interest on homes up to $500,000 ($1 million for married couples). This will require a bit more work because you will need to itemize your deductions, which means you should see an accountant.
Sometimes people are required to pay points on their mortgage to get better rates on their loan. These points may offer a tax break if they meet certain requirements. First of all, points must be allowed in the area where the home was purchased. Second, the mortgage must be for a home that is being bought or built as a main residence. The deduction must also be taken the year the loan to buy a home was obtained and the points cannot be out of the normal range.
Each year, for as long as you own your home, you can deduct the amount of your property taxes. With most loans these taxes make up a percentage of your monthly payment and are set aside to be paid once a year. You will receive information on the cost of these taxes when you receive information about the interest from the lender.
The Mortgage Forgiveness Act extends through 2012 and allows those that fell into foreclosure the ability to not pay taxes on the forgiven amount. In most cases, forgiven debt is taxed as income. Those that restructured their loan also qualify. The amount forgiven is up to $2 million for married couples and $1 million for single homeowners.
Tax-Free Capital Gains
A capital gain occurs when something is sold for a profit. With most capital gains, the seller is taxed on the amount gained. However, with residential real estate, the homeowner may qualify for a tax break on the first $250,000 ($500,000 if married) of the gain.
Energy Saving Improvements
Last, but certainly not least, homeowners making improvements to their property, in order to have a more energy efficient home, can also take advantage of tax breaks. There are a number of items that qualify ranging from windows to roofing and you may be able to deduct up to 30% of the costs from your taxes up to $1500.
As a homeowner, it pays to take advantage of these tax breaks. While this may mean getting the assistance of a professional accountant, it also means saving hundreds, if not thousands, of dollars.
About the Author: Dennis Allenbaugh is a mortgage specialist who loves seeing people benefit from homeownership each year. He recommends sites like Home Loans Australia and others to those looking to qualify for a home loan. Now’s the time to start thinking about purchasing a home.
The introduction of the internet has ushered in a multitude of online calculators freely available for anyone who needs them. From basic calculators to the most complex calculus equations, to mortgage and auto loan calculators, name it and you will find it online. With just a few clicks here and there, you can easily arrive at the number you are looking for.
Calculators have become an important tool evidenced by the fact that most of our households and offices today are filled with them, we have them on our mobile phones. PDA’s and watches. With the wide array of calculators to choose from, one is fast gaining popularity as an important tool for future homeowners, that of the mortgage calculator with taxes. This simple online tool can help you deduce your mortgage payments based upon your total loanable amount compounded with interest rates and loan terms while factoring in the taxes involved.
Another variety of mortgage calculator does its work based on your total mortgage amount per thousand, which can easily be summed up through a payment per thousand calculator. This calculator quantifies your mortgage payments and allows you to see what it will cost you to buy a larger or smaller home.
To make your online mortgage computation much easier, we are putting together a step by step guide that can make every newbie a calculator expert in no time.
Input the total amount of loan you wish to apply for. If you are looking towards making a down payment, then you will also add that in on the specified area. The online calculator will automatically reduce your total loan amount based on your down payment.
Input your expected interest rate. You can search online to look for the average interest rates available in the market or inquire from your local bank to come up with a realistic number.
Factor in your desired loan term, you can choose from the available options though most borrowers opt for a 30 year fixed term.
Include your local cost of taxes and insurance needed for your mortgage loan.
Press enter and let your online calculator handle the rest.
Through these simple steps, you will be able to get an accurate estimate of how much your mortgage payments will amount to and will help you assess whether your are financially prepared to take on this huge investment.
Most people realize that some form of life insurance is almost mandatory these days. Given the costs associated with providing for any family’s needs, the death of one spouse can leave a deficit in the family budget that simply cannot be replaced without life insurance. Whole life is one of the most popular forms of permanent life insurance for precisely that reason: because it offers guaranteed benefits and cash value upon the policyholder’s death. That does not, however, mean that it is wise to just run out and buy the first prepackaged whole life policy that you encounter. There is a right way and a wrong way to buy whole life insurance.
The Wrong Way
Too many people take the simple route to purchasing whole life insurance. They select an arbitrary number – or have an insurance agent select it for them – and settle for a policy that provides that level of coverage to their heirs. This often leads to people being either over-insured or under-insured, and both present difficulties for policyholders and their families. Being over-insured may provide for larger benefits and cash payouts when you die, but such a policy also requires you t pay significantly higher premiums than you otherwise would. Being under-insured may not present you with any immediate difficulties, but it is guaranteed to leave your family without the necessary resources to maintain a consistent lifestyle when you are gone.
Doing it Right
Obviously, purchasing whole life insurance properly entails more study and research than most people assume to be necessary. The first step is to sit down and realistically determine what your family will need when you pass away. Take into account the home mortgage, college for the kids, and any other anticipated large expenses that are likely to occur in the future. Remember, your whole life insurance policy is designed to help the family maintain a certain standard of living if you die.
The next step involves making sure that you insure the most pressing needs first. You can always add to your whole life policy as time passes and new needs arise, so concentrate on those pressing needs now with the recognition that you can modify your coverage when your situation changes. Few of us have all of the resources we would like to have to protect against any possible loss, so always begin by doing what you can do now. Always remember that the best life insurance policy is the one that you can could on no matter what.
Keeping Pace with Life
Your whole life policy should be subject to your personal review on an annual basis, so that you can keep your coverage updated as your life changes. The most important thing that you can do to help you make those updates is to partner with a life insurance company and agent that you trust. Assuming that he or she is competent, the agent will be your best resource in maintaining a whole life policy that continues to meet your needs as the years and decades pass by. Best of all, you can ensure that your policy covers everything that it needs to cover, without being excessive.