Taxes

Mortgage Tax Deduction End of Year

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Every year a plethora of financial articles come out telling people how to save money on their taxes at the end of the year. It’s a fine idea, and frankly, no stone should go unturned. However, the best tax planning takes happens year round. That being said, there are numerous last-minute ways to cut income taxes by making last minute moves in December. Today, we examine one of the most common end of year tax moves, paying your mortgage early. Check here to learn how to deduct mortgage interest on your taxes. Make Mortgage Payment Early to Deduct More One of the biggest tax deductions that is available to ordinary taxpayers is the mortgage interest deduction. Simply put, the mortgage interest deduction is the ability to deduct whatever amount you pay in mortgage interest from your income taxes. There are several rules and exclusions, but they don’t apply to most taxpayers unless you have more than $1 million in mortgages or several houses. This is one of those tax deductions with no income limits.  You do need to itemize your deductions in order to claim the mortgage interest deduction. For many people, the amount of their mortgage interest deduction determines …

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How To Deduct Mortgage Interest on Income Taxes

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how to deduct mortgage interest house picture

One of the biggest tax deductions most taxpayers will qualify for is the interest paid on their mortgage. Mortgage interest is tax deductible. Up to 100 percent of mortgage interest paid during the tax year can be deducted on your income taxes as long as your total mortgage balance is less than $1 million. In other words, unless you have more than $1 million in mortgage loans, you can deduct all of your mortgage interest. Is Mortgage Interest an Itemized Deduction? Mortgage interest is an itemized deduction. In fact, for the majority of taxpayers who get most of their income form a regular job at a company where you have taxes withheld from your paycheck based on your W2 form, the mortgage interest you pay determines whether or not you should itemize your taxes or file with the standard tax deduction. For business owners filing a Schedule C or those with a large amount of investment or interest income, that will not apply. How To Decide Whether to Take the Standard Deduction or Itemize The standard deduction for 2015 is $6,200 for single filers and $12,600 for married filing joint taxpayers. If the amount of mortgage interest reported on Form 1098 …

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What You Need To File Your Taxes

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If you are an American, chances are you have started receiving tax forms and reports from various companies. Recently, many companies, banks, brokerages, mortgage companies, and charities have started providing tax reports and forms electronically. Ironically, you may get a notice in the mail from these entities telling you that you will get your tax documents electronically. Forms Required to File Taxes Exactly which forms you need to file your income taxes depends upon your individual tax situation. People who own their own business have more tax forms they need. Likewise, people with more deductions, or various financial vehicles such as trusts require additional documents as well. If you have any financial accounts or situations that are not “standard” you’ll need to check with an accountant or tax professional to find out what is required for you to file you taxes. Employed by an Employer If you, or you and your spouse, are not self employed, then you will need a W2 Form from your employer to file your taxes. The W2 form lists several numbers including your total wages for the year, as well as various contributions to things such as 401k plans, or cafeteria accounts, or pre-tax insurance …

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Capital Gains Home Sale with Home Office Depreciation

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If you have a small business, the taxes can be pretty tough to swallow. That’s why you need to be sure that you take all the tax write offs you possibly can to lower your small business tax bill. These small business tax deductions are particularly important for solo entrepreneurs and other self-employed business owners who get stuck with additional self-employment tax. For many business owners, one important tax deduction is the home office tax deduction. This deduction allows home owners who use part of their home for business purposes to write off expenses including deducting property taxes, a portion of utilities and other costs of owning and maintaining a home. How Home Office Affects Capital Gains on Home Sale When you sell property, like your home, you typically have to pay taxes on any increase in the value of the asset. These taxes are called capital gains taxes. Fortunately, these taxes are often taxed at a lower tax rate than your standard tax bracket rate. Unfortunately, on the sale of a large asset, like your home, these capital gains can still be substantial. Luckily, there is a special home sale exclusion for capital gains on the sale of your …

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What Happens If I Don’t Pay My Taxes

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Doing income taxes can be a trying time for many taxpayers. There are numerous forms to fill out, cumbersome calculations to perform, not to mention, the rules change every year. When you finally finish, you might end up owing a lot of taxes to the government. The IRS isn’t know for being forgiving, but that doesn’t stop people from wondering, what happens if I don’t pay my taxes? Failure to File Taxes First, it is important to distinguish between not filing your income taxes, failure to file, from not paying your income taxes. There are significant additional penalties for not filing your income taxes on time. If you can pay your taxes, but can’t get them done on time, then consider filing a Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax. Filing this form grants taxpayers an automatic extension of time to file. This form must be filed by the April 15th filing deadline just like a regular tax return would be. Once filed, the new deadline for filing your taxes moves to the beginning of October. Beware, even if you file for an extension, you do NOT get any additional time to pay …

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Detecting IRS Phone Scam

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The latest phone scam goes something like this: Someone calls and claims to be from the IRS. They say that you owe taxes and you need to make a payment right away. Otherwise, the scammer says, you may be deported, lose your business license, or even be arrested. This is in addition to the ongoing problems with tax fraud identity theft. How To Tell If It’s the IRS Phone Scam There are a couple of tip offs that can help you detect whether it really is the IRS on the phone. First, off, the IRS does most of this stuff by mail. Mail gives a verifiable paper trail for future legal proceedings if necessary. Also, having a computer spit out 10,000 letters is way faster, cheaper, and more efficient than calling 10,000 people. If you haven’t gotten a single letter from the IRS before you get a phone call, be very suspicious. Sometimes, the scammer gets lucky and maybe you have gotten some letters from the IRS. Maybe you didn’t understand them completely. Now, it’s time to understand how the IRS threatens people. The IRS cannot do ANYTHING at all without telling you IN WRITING that they are going to …

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What Happens If You Don’t File Your Taxes On Time

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What happens on April 15?  For those of you from non-US countries, that probably doesn’t mean much.  To us Americans, April 15th is Tax Day, the deadline to file tax returns. Yup, and entire day taken over and corrupted by government. Well, I guess those interstates won’t pave themselves for free. If you’re working at the last minute then you might be looking for last minute tax tips.  Of course, what many people really want to know is what happens if you don’t file your taxes by the deadline and is there anything I can do if I can’t get my taxes done? The answer, actually, is surprisingly benign.  Filing late is a no-no and can result in all kinds of problems, not the least of which are penalties.  But, there is a ray of hope.  Instead of filing your tax return, file for an extension.  One extension is granted automatcially, so all you have to do is send in the form.  If you can’t get your taxes done by April 15, then make sure you file your request for extension in its place to avoid penalties, fees, and interest. If you file for an extension when are your taxes due?  …

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Will IRS Really Settle Tax Debt for Pennies on the Dollar?

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The latest radio commercials claim that if you owe the IRS $10,000 or more in back taxes or delinquent tax, that there are government programs that will help you settle that tax debt for pennies on the dollar. They go on to say that, with this company’s help, of course, you can make you tax debts go away, including fees and penalties. Sound too good to be true? It probably is. How IRS Settles Delinquent Tax Debts In many ways, the IRS is just like any other creditor. If someone owes them money, then they want to get paid that money. However, in many other ways, the IRS is unlike any other creditor out there. For most companies, collecting on a delinquent debt is a cost-reward calculation. The amount of possible debt recovery is compared to the cost of getting that money. For a very large debt from someone with the means to pay it, it is worth it to engage lawyers and go to court to seize assets and garnish wages. For smaller debts, or for debtors with no assets, the cost of collecting the debt isn’t worth it. There comes a point where trying to collect the debt …

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Amazon and TurboTax Refund Special

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So, I haven’t had a chance to dig through all the details yet (I will soon), but there is a new wrinkle in the tax software refund game. Consider this your, “Wait, there might be a good option here before you buy,” post, not your go for it post. For several years, there have been various offers about what to do with your tax refund. For example, H&R Block got into trouble a few years ago by directing refunds into IRA accounts that had fees and charges that made them a bad deal. This year, TurboTax has an interesting new twist for Amazon shoppers. Amazon Gift Card Bonus from TurboTax TurboTax is one of the most popular tax software packages. (Look for full details and review of TurboTax and Tax Cut coming soon on Finance Gourmet.) There are tons of ways to buy TurboTax including online, via direct download, and of course, via boxes of software in stores. The first rule of buying TurboTax is never pay full price. There are always sales, and deals, and bundles of software that make buying TurboTax cheaper. The most common offer bundles Quicken, which is also an Intuit product with the tax software, …

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IRS Mileage Rate 2014

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Note: The latest standard mileage rate deduction amount from the IRS can be found at the updated, current article. Here come the end of year numbers from the IRS for 2014. Recently, the Internal Revenue Service released the official 2014 standard mileage rates. Keep in mind that these are the number for miles driven during 2014. You’ll be using the 2014 numbers in early 2015 when you are filing your 2014 taxes. If you need the mileage rates for 2013 those are the one you use for the income taxes you are filing in early 2014. 2014 Mileage Rate Deduction Standard As always, the IRS allows two ways to deduct expenses associated with tax deductible use of a motor vehicle. The taxpayer may claim either the actual expenses for vehicle, or claim a standard amount per mile instead. To claim the actual expenses for driving an automobile for deductible reasons, the taxpayer must keep complete records of all expenses occurred during the year. Considering how complicated filing income taxes is in the first place, why add another layer of complexity by keeping even more records, and making even more calculations. The 2014 Mileage Rates are: 56 cents per mile for …

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