Tag Archives: Tax deduction

TurboTax Can Help You With Your Taxes Filing

According to the IRS, tax-filing seasons starts Jan. 20

According to a statement made by the IRS yesterday, taxpayers can being filing their taxes 2014 returns on Jan. 20.

In spite of a last-minute tax law that as passed by Congress and and signed by President Obama, tax-filing season will begin on time.

Early in December, a bill was passed by Congress that extended more than 50 tax breaks that expired at the beginning of the year. This law has extended these tax breaks through the year’s end, making it possible for people to claim these on their taxes 2014 returns. This bill was signed into law by President Obama on Dec. 10.

View image | gettyimages.com

In years past, tax season has been delayed by last-minute tax laws that were passed by Congress. According to John Koskinen, the IRS Commissioner, this will not be the case this year.

In a statement, Koskinen said that the IRS has reviewed the late changes to tax law and found that there was nothing to prevent them from testing and updating their systems.

Every year, millions of Americans file their returns during the first several weeks of the tax season in order to expedite their tax returns.

The IRS says that in recent years, it has been able to issue the majority of tax returns within just 21 days if these returns were e-filed through a system like TurboTax. According to the IRS, filing electronically is the quickest way to get a tax return.

Kosinken also told reporters that refunds could be delayed as the result of agency budget cuts. In this recent statement, however, he did not estimate the time frame for this delay.

Approximately 150 million individual tax returns will be processed by the IRS this year. The average refund this year was about $2,800.

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Talking About Buying A Home

Things To Know When You Are Buying A Home

Buying a home can be a lot of different things. It will most likely be the most money you will spend on any single purchase. It may be the biggest debt you ever incur. And very likely, it could be the best investment you will ever make. Needless to say, it is a major decision to be made.

H&R Block

There are certainly many ways in which buying and owning a home is going to reflect on your personal income taxes. This is why seeking a consultation with H&R Block prior to making that purchase simply makes so much sense. They will make sure you grasp precisely what you are getting involved with.

Congress is constantly revamping the rules in the tax code, points out Lynn Ebel who is a tax attorney. Lynn works with the H&R Block Tax Institute.

Itemizing Deductions Helps Lower Tax Bill

“Itemizing deductions gets the homeowner a better benefit than the standard deduction”, Lynn points out. Homeowners doing so must complete Schedule A of Form 1040.

Regarding your home purchase, here are five things important that you know.

1. Mortgage interest may be deducted.

Homeowners are allowed to deduct the interest on their mortgage. For the year, couples may deduct up to one million filing jointly, and five hundred thousand each filing separately.

2. Real property taxes paid may be deducted

A great positive when you itemize your deductions is that you may claim your real property taxes for the time you hold ownership of a home that particular year.

3. For the purchase of your first home, a retirement savings may be used.

Without incurring the 10% penalty for early withdrawal, $10,000 may be withdrawn from your Roth or traditional IRA.

4. Closing costs are not deductible

5. At tax time, home improvements help

The bottom line is that before proceeding with a major purchase like a home, be sure to check with your tax adviser first.

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U.S. tax reform – Effect of decrease in the tax code’s bias for debt

The much awaited tax reform has at last arrived to reduce the tax code’s bias for debt. As per the recent announcements, the U.S. corporate tax rate may reduce to 25% from 35%. The non-financial corporations will be allowed a deduction of nearly 65% of their gross interest expense, whereas the financial corporations will be allowed a deduction of up to 79%. Some special rules and regulations have also been implemented for the corporations who have stated a malfunction in the tax purposes.

Interest Rates

Interest Rates (Photo credit: 401(K) 2013)

According to various financial experts, the general strategy is to reduce the corporate tax while restraining the interest rate deduction. This strategy may be helpful in reducing the tax code’s bias for debt. Consequently, the investments projects may get more lucrative for U.S. in the near future.

Debates are on regarding whether the situation will really improve or not. Doubts have been raised whether the tax code’s bias for debt will actually be modified or not. Well, there are justified reasons behind these doubts and debates. The reduction of tax code’s bias has both benefactors and oppositions. If the bias gets corrected, then it may be helpful for numerous debt finances. On the contrary, some organizations which were used to take advantage of this bias may face serious hike in the tax burden. They may encounter difficulties to pay off taxes.

However, the evaluation of the tax reform proposal must not be done by judging only individual interests. If the tax reform may help in overcoming the economic obstacles in U.S., then it should be received positively. It’s being assumed that the tax deductions may lead to efficient distribution of resources. Many corporations may avoid issuing debts because of interest rate deduction. This will ensure that the organizations will not make financial decisions due to tax purposes. Rather, the decisions will be influenced by economic reasons. This may be beneficial for an overall economic growth in U.S.

As per some financial analysts, the application of interest cap to the pre-existing debt is not an excellent idea. To make the reformation successful a few other steps must also be taken by the U.S. government. If the tax reformation permits grandfathering of accessible debts, then the corporations may rush for issuing long-maturity debts. The rush to pay off taxes must be reduced too. For the reduction of the rush the U.S. government must take some fortified step. Only then the corporate taxes may be controlled and the reformation may turn out to be really effective.

There are arguments regarding what should be the nature of tax reformation. Many financial experts believe that the interest cap must be applied only to the net interest expenses and not to the gross interest expenses. This opinion has faced much criticism. The application of interest cap to the net interest expenses may raise the amount of revenue. As per the reports of the Congressional Research Service, the reduction in the corporate taxes may reach the 15% notch.

The restriction of net interest rate deduction may even increase the effective marginal tax rates on the vital debt-financed investments. So it’s better to concentrate on applying the interest cap on net interest expenses rather than targeting gross interest expenses.

The U.S. tax reforms may have reduced the tax code’s bias for debt but it’s not yet clear how effective this is going to be. Unless the tax reforms turn out to be completely revenue-neutral, it can’t be effective enough.

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Reduced Tax Assessments Sought By North Jersey Homeowners

Last year, Nora and Pat Sfarra were in the unenviable position of watching the market value of their eighty two year old home in Teaneck decrease, while their property taxes simultaneously increased.

Assisted by a tax appeal firm, the Sfarras managed to put this right and got the assessed value of their home decreased from $351,000 to $310,000. This gave them the benefit of saving $1,000 worth of tax, which is a real gain when you are paying in excess of $8,000 in tax. Nora Sfarra was happy that she “got something off” in any event.

Dorothy Monoopli was in a similar scenario and had to appeal as the Sfarras did on how much her condo in Hackensack was assessed for. She ended up saving $30,000 as a result of her lower tax assessment.

Both Ms Monoopli and the Sfarras are among many thousands of North Jersey residents who have contested tax assessments on the real estate that they own, a necessity with the drop in the value of homes in recent years. And it is a scramble for these people to get their paperwork in order for the April 2 deadline.

The town budgets are being adversely affected by the sheer scale of these appeals for lower tax assessments. The League of Municipalities’ executive director, William Dressel, has admitted that problems are being caused for communities statewide.

The problems stem from these appeals reducing the amount of property tax revenue the towns would otherwise get, which has an impact on the quality of service that they provide. So it looks as though either a higher tax rate or cuts to those services will be introduced.

One method of responding to the surge in appeals has been for towns to perform their own reassessments to ensure that valuations are in step with the market, giving homeowners little leeway in disputing assessments. After all, they can dispute a property assessment, but not a tax bill. Hackensack based lawyer Martin Sharit puts it bluntly that thinking you pay too much in tax is not sufficient grounds to appeal, as “we all pay too much in taxes.”

While regional house prices have dipped twenty percent since the home price run-up this will not make your tax appeal a certainty. After all, towns change values with a ratio that takes into account the change in house price due to the economy after a revaluation. You can divide your assessed figure by the ratio to see what your real home value is, and find the ratio itself at state.nj.us/treasury/taxation/lpt/lptvalue.shtml.

For instance, Teaneck’s ratio is 104 percent, which would mean that a property with an assessed value of $350,000 is now actually valued at $336,500. It is clear that the town is aware that the assessment is much higher than the real value of the property.

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Money Saving Tips Through Tax Moves

Every year there are changes that are made in most homes. These changes always affect the taxes filed. In order for you to save up on tax, there are a few things to consider.

Check the following money saving tax moves before filing your tax returns

If you changed or set up a business in 2011, then the expenses for all the movements will be tax deductible.

• To be eligible for job search expense, you have to have used more than 2% of your adjustable gross income. Make sure to list your deductions. This means that those expenses greater than the 2% may be claimed back.

• Another tax deductible expenses include that moving expenses. However, this depends on a test of time and distance.

• All unemployment benefits received from 2011 onwards are taxable.

• If you use your home as your central place of business, as a meeting place for customers or you have a separate structure detached from your home, used as an office, then the home office deductions will apply.

If you sent a child to college or had another one join the family.

Or, if you are a parent you may be able to save up a dollar or two when filing your returns.

• If you have a boyfriend, girlfriend or any other individual that qualifies the test of being a relative and a dependent then you will qualify for dependent deductions.

• The government is generous enough to provide for education tax credits and deductions for those individuals who are paying expenses for their education or their spouse’s or dependent’s education.

• Qualified expenses of up to 35 percent of qualifying expenses are deductible under the child and dependent care credit.

• If you decide to adopt, then you will qualify for a Qualified Adoption Tax Credit of up to $13,360.

As long as you own a home, bought it or refinanced it, you may be lucky to receive some form of deductions on your tax to help you reduce the cost of being a property owner.

• The loan origination fees paid to refinance your mortgage taken up when the interest rates were lower then you may qualify for the mortgage refinance deductions.

• The overall Energy tax credit was dropped in 2011 but if you have new insulation, roofs and doors you may be able to save up to $500 on deductions.

• Most first-time Home buyers are lucky. This is because, if they took up credit for that purpose, they tax credit will be paid through their tax returns filed yearly.

From these money making tax moves, which one will you use to reduce you tax liability?

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How Education Tax Credits Can Help You Get To College!

Many students are scared away from pursuing postsecondary education by the perception that they cannot afford it. It is important to know that the federal government is currently offering two different types of tax credits – The American Opportunity Credit and the Lifetime Learning Credit – that may help you to offset high education costs. Both of the available education tax credits pay for eligible expenses up to a given amount, including tuition, books and equipment or material fees.

The Lifetime Learning Credit is also good for up to $2,000 in credit each year, and covers not only degree-seeking students, but courses that are related to furthering one’s job opportunities. Unlike the American Opportunity Tax Credit, however, those who claim this credit are not eligible to receive a tax refund based on its use. In other words, you can only receive the maximum amount of tax that you owe.

Although many students do qualify for one of the two grants above, for those that do not, there is still the opportunity to take a tuition and fees deduction on your taxes. This can save you up to $4,000 in taxes. It is important to note that individuals may not claim both the tuition and fees tax deduction and either of the tax credits -the American Opportunity Tax Credit or the Lifetime Learning Credit – in the same tax year. It is, therefore, to your advantage, to consult with someone with knowledge in the area of tax law, or to conduct careful research on your own, to determine which of these options would be of the most benefit. The most important thing to remember is that there are numerous options to help students pay for postsecondary education. It just takes a little bit of legwork to find out where they are.

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