Tax Breaks for Homeowners: Are You Missing Out?

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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.

Mortgage Interest

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.

Points

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.

Property Taxes

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.

Mortgage Forgiveness

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.

Top Ten Most Overlooked Tax Deductions

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Each year the Internal Revenue Service (IRS) reports the most common tax deductions taxpayers forget about when submitting their income tax return.  Among one of the most common mistakes taxpayers make is they forget to place their Social Security number on the form or they make a mistake when entering the information.

It is possible for some taxpayers to be overpaying so it helps to make sure you review deductions available and understand how to claim them correctly to obtain the credit.  Below is a list of the most common deductions overlooked by taxpayers:

  1. State sales tax: Taxpayers who live in a state that doesn’t impose an income tax often forget to claim this deduction.  The IRS has a table that can be used to help you figure out the amount to deduct.
  2. Charitable contributions: This includes charitable deductions from your paycheck, items purchased for a charitable event such as a fundraiser or if you drove your vehicle for charity, the IRS lets you deduct a certain amount per mile.  Save all receipts and if you make a donation of 250 or more, get written confirmation from the charity.
  3. Student loan interest: If mom or dad paid for a student loan for a child not claimed as a dependent, the interest can be claimed on your return.
  4. Moving expenses: If you moved to take a new job, the expenses related may be deductible.
  5. Child care credit: Having a credit can help reduce taxes owed.  If your expense is paid through an account at work, it is easy to overlook but if you pay several thousand for child care it helps reduce taxes owed.
  6. Earned income tax credit: While the rules to this may be complex, many taxpayers don’t claim it.  This is considered a refundable tax credit instead of a deduction.
  7. State tax paid last spring: If you paid state income taxes in quarterly payments or had them withheld, they can be deducted on your current return.
  8. Energy-saving home improvement credit: This is a credit that is 30 percent equal to the cost of energy-saving improvements.  The IRS provides details on qualifications for this credit.
  9. Jury duty payments:  If your employer required you to give them payments you receive for jury duty, you can claim the amount on your return.
  10. Refinancing points: There are points that can be deducted when you refinance your home at one time.  This depends on how many years are on your mortgage and you can deduct points that are remaining if you sell you r home after paying if off or refinance again.

Andrew writes frequently about personal finance as well as issues effecting both consumers and small businesses, covering everything from credit cards to mortgages to loans.

Tax Deductibles for Internet Marketers

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Just like any group of freelancers or workers who run their own businesses, one of the advantages of being an internet marketer is that there are quite a number of expenses and deductions that you can claim when it comes to filling in your tax return. There are of course a number of items specific to your particular business that you will be able to claim and these should be discussed with your accountant. But there are certain areas that every one who works freelance and online will equally be able to claim as a legitimate part of their business expense and some of the more common areas will be outlined here in this article.

The first and most important thing to note is that no matter what it is you are going to claim for you will need to keep records of each and every transaction and keep hold of all your receipts. If it is for a piece of online software or a hosting account, print it off and file it for later. This will save you a massive effort and printing session when it comes time to do your taxes!

Secondly, no matter if your entire business is online, the first place to look for expenses is the physical space of your home or office.  If you work from home, add up what percentage of your home is dedicated to conducting your business. You will then be able to claim this back as a percentage of your rental or mortgage payments. In addition, any expense related to the running of that premises for the purposes of business will also be deductible This includes the cost of utilities such as electricity and phone, as well as anything to do with the maintenance of the property for business purposes. Your computer is essential business equipment so this should be deducted too. This also applies to the furniture surrounding that computer, so keep receipts for the desk, chair, monitors and printers and anything else you use in the office.

Once you have taken care of the physical space of your business, you should look at deductions for the virtual space. Obviously, just like electricity and phone, you can claim for your broadband service. Your website (or for most internet marketers your multiple websites) are also rented space so you can claim for their domain name purchase, their hosting accounts and any maintenance or site add-on’s you might get from your hosting provider. Any support calls will also be deductible. After that, think about any plugins or scripts, software or ebooks you might have purchased for the business – most of them will be deductible. Most importantly, think about any outsourcing you might have done, from backlinks to paid articles, design work to a virtual assistant. All of these expenses can be reclaimed.

Lastly, think about your advertising. Did you spend any money on adwords or Facebook ads, or even put an advert in a trade publication or website? All of these can be fully reclaimed.

Remember, there’s no point in not claiming. Through use of a good accountant and a bit of discipline each time you make a payment through the year, you could find that when it comes time to pay your taxes, you have significantly reduced your arrears.

Alex Simmonds is a journalist and blogger. He currently writes a blog about the contracting sector covering everything from contractor mortgages to payday loans.

Common Tax Deductions That Are Overlooked For Small Businesses

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Having a successful tax season involves proper planning throughout the year to maximize on the deductions that relate directly to your business and its income level.

Starting up Expenses

Capital expenses are one of the expenses that are constantly overlooked when looking for ways to reduce your tax expenses. They usually include marketing, overheads and other related expenses needed to start off your business. You can only deduct them for the first five years after your business opens and cash starts flowing into the business.

Education and training expenses

These are some of the other expenses that most businesses tend to overlook as deductions. Any training and education carried out to improve the skills of your workers and the business in general can be used to reduce the tax liability. However the training and education needs to be related to the business and this rule has to be strictly followed for the expenses to qualify as deductions.

Fees for Professional Services

Some of the professional services sought by the business such as accounting and architect fees qualify as deductible expenses. The only rule that one has to consider is that the services need to relate to the current year. If they relate to the future, the expenses then need to be distributed over the years.

Bad Debts Expense

Debts that you never recover from your customers qualify as deductible expenses. However this only applies to businesses that sell goods and not those that provide services.

Other Expenses that Qualify

Businesses differ and hence there may be other expenses that may qualify as deductibles in your business. IRC and 162 can help you identify some of the unique expenses to your business. In case you find them too confusing, refer the matter to your tax accountant with some of the codes that you think fit in with your business. He or she will be in a position to guide you to identify the respective expenses.

This is one thing that you should be very sure about in your small business. Your tax accountant can help you ensure that you take advantage of the tax deductible expenses.

Tips on Reducing Property Taxes

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It’s bad enough when you have to pay taxes at the department store, grocery store or on your personal income, but it can be extremely frustrating having to pay taxes on a property that you own, and not only that, but having to do it each and every year. Those taxes can easily reach into the thousands of dollars or more and can put a severe strain on your personal finances. However, there may be several ways to lower the property tax amount that you are paying; ways that if aren’t taken advantage of, could cost you hundreds or even thousands of dollars each year.

If you’re looking for ways to reduce property taxes each year, here are a few tips that could gain you substantial savings.

Exemptions

Property tax exemptions may be one of the easiest and most significant ways in which to save money on your property taxes. By way of senior, homestead or homeowner, or military exemptions, you could realize extensive reductions upon your property tax bill.

In order to find out what exemptions you might be eligible for, as well as their terms and conditions, you will likely need to visit your country assessor’s office either online or in person since the ways in which exemptions are determined and applied will likely vary from state to state and even county to county. Your eligibility may also depend upon how long you’ve lived in the property for which you are applying for exemption status.

Reassessment

Depending upon when your property was last assessed and the potential change in value it has experienced since that time, it could be worth your while to request a reassessment from your assessor’s office. If you feel that your property has seen a significant decrease in value, a reassessment might substantially lower your property tax bill. However, it is important to bear in mind that a reassessment can be a double-edged sword. If an assessor finds that the value of your property has actually increased, such a move could backfire and result in higher taxes, so it is important to do your research and conduct your due diligence before requesting such a re-evaluation.

Tax Deduction

Another way to realize significant savings on your property taxes is by ensuring that you are taking advantage of your of tax deduction on your federal taxes. Since mortgage interest and property tax payments may be eligible as a deduction on federal income taxes each year, this is yet another way in which to get at least a portion of your tax money back. Similar to property tax exemptions, the amount for which you are eligible for a tax deduction for a particular tax year may depend upon how many days you have actually resided at the property. This could be an important consideration for those who have just moved into or away from a property.

Conclusion

Ways to save on property taxes and the amounts involved can range significantly depending upon your geographic location as well as your personal situation. It may therefore be important to consult your particular county assessor’s office or a tax professional to learn exactly what savings you may be eligible to receive.

Anastacio Mindiola is an accomplished attorney and business owner. His company helps home and business owners protest property taxes in Houston and the surrounding counties. For more information on how you can lower your property taxes visit http://www.republicpropertytax.com.