When can you deduct mortgage interest? (This applies to both a first and second home):1. You must have title.2. The mortgage must be in your name (or have your name on it).3. The home must secure the mortgage (or it is not home mortgage interest).4. You must make the mortgage payments with your money.Sometimes the last item can be accomplished with gifts, but know these rules before getting a mortgage, so you actually can deduct the interest.
Brian’s Tax Musings
I have many clients who have S Corporations and are always asking how much profits should be paid in salary and how much can be taken as income not subject to payroll taxes.There is not clearcut answer, but the Bradford Tax Letter has this situation and a little clearing up of the problem: “A standard S corporation tax strategy is to pay a low salary to save on payroll taxes.Earlier this year, we published an article titled “Reasonably Low Salary for S Corporation Owner”that addresses what you need in order to justify a low salary and states that the zero salary is out. David E. Watson, CPA, a tax partner in the Iowa accounting and wealth management firm ofLarson, Watson, Bartling, and Juffer (LWBJ) suffered a salary-too-low problem. He and the other partners in the firm operated as individual S corporations with a 25 percent interest each. The firm paid its profits to the four individual S corporations of the partners. In 2003, Mr. Watson’s S corporation paid him $24,000 in salary and $222,000 in dividend distributions. The IRS disagreed. It wanted $199,000 in salary and $47,000 in distributions. Mr. Watson took the IRS to court, asking for summary judgment. During the court’s [...]
Brian’s Tax Musings
Well now that tax filing time is over (except for extensions) it will soon be time to do some planning for next year’s taxes. WHAT!! Wait a minute; we just finished filing and now you want to start worrying about next year? Well you don’t have to start planning tomorrow, but get into the habit of thinking of items that will help save you taxes well before the end of the year. Maybe in May or June you can call me and we can discuss things you can do now to save you taxes when you file. If you wait until 2012 to think about it, it is too late..