The question nobody ever asks is: is all the mortgage interest my bank form 1098s shows deductible? You are allowed to deduct mortgage interest if: 1. You took out your mortgages on first and second homes before October 13, 1987 – these mortgages are grandfathered into the rules and you can deduct all your interest. 2. You took out your mortgages on first and second homes after October 13, 1987 and you have $1,000,000 or less in regular mortgage and $100,000 or less in home equity debt (where you borrowed money and did not put the money into the house and did not refinance) you can deduct all your interest on these mortgage loans. You have to have the mortgages secured by the properties plus make all the payments in 1. and 2. to get the deduction. 3. If you refinance these mortgages, the additional money you take out may not be ‘acquisition indebtedness’, which means it could be considered personal loans and the interest on that part of the mortgage not deductible. If you don’t have home equity debt $100,000 of the additional mortgage refinanced can still be deducted, but the rest can’t. You will have to allocate the interest between deductible [...]
Tax Musings of a Burbank CPA: Tax Withholding Still Controversial After 70 Years
This year marks the one hundreth anniversary of the Federal Income Tax, and it also marks the seventieth anniversary of federal income tax withholding. See this article by Bruce Bartlett in The New York Times: http://economix.blogs.nytimes.com/2013/10/22/tax-withholding-still-controversial-after-70-years/?_r=0 Just remember that overwithholding by the federal government results in a tax refund of our own money when we file our taxes, and we are so glad to get that money back (an interest free loan to the IRS for most of the year!) The best tax planning strategy is to owe taxes to the IRS when you file and don’t pay the dreaded underpayment penalty (meaning you only pay in enough tax to avoid the penalty and you keep the float.) This takes more planning but long term you can come out ahead. For financial, accounting and tax musings, You can count on us to count for you! email: bstonercpa@sbcglobal.net phone: 818-317-6035 Website: www.briantstonercpa.com https://twitter.com/bstonercpa
Tax Musings of a Burbank CPA: Five Tips to Get Ready for a Pain-Free Tax Time
With the holiday season just around the corner, it’s a perfect time to get your financial records in order. Tax moves you make now can mean finding more “green” to spend on family gifts and festivities. Here are five quick tips for you to feel more prepared about your financial status as you go into year-end. Avoid Penalties This time of year is ideal to double-check your tax payments to make sure enough has been paid in, and even more important, to avoid overpaying so your money is not tied up unnecessarily. If you’re not sure of your 2013 tax liability, check with your tax preparer. Balanced Books Rather than wait until the busiest time of year for accountants and bookkeepers, you can get a head start now on catching up your books You’ll have more of their attention and you may even avoid a rate increase if you get your books done early. Completed bank reconciliations are a very important part of catching up. Forms It’s not too early to get your orders in for the forms you need at year-end like your W-2s, W-3s, 1099s, and 1096s. That way, your forms will be onsite when you’re ready. Records [...]