Tax day is coming! It seems that April 15th always pops up a little sooner than we expect it. On occasion we’ve had to get an extension, but this year we actually filed early. It is a relief to have it done. Remember, however, if you are having any trouble paying your taxes you can ask for that extension. I am no tax expert, and got these tips from others who seem to know what they are talking about. You need to check these things out for yourself.
And when you file your taxes, give yourself a pat on the back. You are contributing to the common good of our country. While none of us need to pay more than our fair share of taxes, how proud we can be to know that our taxes keep this beautiful country humming along. It is a shame that there are those who see taxes as some kind of punishment for their success, instead of seeing them as they are — a share in our common life. Also, if I’m paying taxes — hey, I must be doing okay. I’ve made enough to pay taxes! Hurray!
If you are an investor.
Evidently investors can claim up to $3,000 in capital losses in investment accounts against ordinary income. Investors who have been burned by a Ponzi scheme can claim more. The IRS has issued guidelines that allow investors who have been victims of a Ponzi scheme to claim their losses as a “theft loss” rather than a “capital loss” and include not only the net amount invested, but also the fictitious income reported on tax returns in the year the scam was discovered. You investors will know more than I do about this stuff.
For homeowners and homebuyers.
This is important if you have a short sale on your home. If your mortgage debt is partly or entirely forgiven during tax years 2007 - 2012, you may be able to claim special tax relief and exclude the debt forgiveness income. Normally, debt forgiveness results in taxable income. You don’t want to be surprised by these taxes. Under the Mortgage Forgiveness Debt Relief Act of 2007, you should be able to exclude up to $2 million of debt forgiven on your principal residence. You need to find out about this and protect yourself.
I think most of us are aware of the tax credits for homebuyers. If you bought a house in 2008, you can take a credit of $7,500, but you’re required to repay that credit over 15 years. It’s like an interest-free loan. Under the new stimulus package, buyers who purchase a home in 2009 have the option of taking a credit for up to $8,000 on their 2008 or 2009 return. That is an actual credit; you don’t have to pay it back. This is not a loan! We real estate professionals really like this tax credit, because it encourages those first time home buyers to make their move.
The earned income tax credit, EITC
If you are a married couple and are filing jointly, and your income is under $42,000, and you have two or more children, you can qualify for a credit of more than $4,800. If you own a home, but you don’t itemize, you can add your real estate taxes to your standard deduction, up to $1,000 for married couples that are filing jointly. Particularly valuable for retirees. This is definitely worth checking on and using.
For the unemployed.
The cost of looking for a job in the same field as the one in which you were recently employed can be claimed as a miscellaneous itemized deduction. It is important that you are looking for work in the same field, not something new and different. Deductible expenses include transportation costs, lodging, resume services and long distance phone calls. If you’re paying the full cost of your health care since losing your job, health insurance premiums can be included with your medical and dental bills as deductible expenses as long as you itemize.
Tags: april 15th, tax tips, taxes
