Tag: Itemized deduction

Turbo Tax Advice New Filers Can Use From Intuit

Turbo Tax Advice

When I filed my taxes for the first time, I didn’t have Turbotax or any other program to help me out, no Turbo Tax Advice. It was a very intimidating and scary process for me and I was constantly worried about messing up and having to pay a penalty to IRS. Filing for taxes is an easy job if you are aware of what you need to do. The following are some of the tips and 2015 Tax Advice that you can use as a first time tax filer:

The first thing that you need to do is to organize all your files and documents. Have all these stored in one place, be it the forms, the receipts or other kinds of relevant documentation. By doing this you will be able to save a lot of time and also make the whole process more easy and convenient. Next, you should also check whether you qualify to file for free or not. If you have a W-2 along with very little bank interest then you would qualify.

Also, do not forget about filing for your state taxes with TurboTax 2015. When you have a tax filing program like TurboTax, you would be able to file for state taxes and federal taxes easily because all your information can be transferred automatically. Another top tip to keep in mind would be to file online using Turbo Tax Advice instead of doing the process manually because the latter is a time consuming process and the scope for errors is also higher.

Paying for College: Student Loan Interest Deduction Explained

Interest on student loans can get overwhelming. Luckily, the IRS allows for the Student Loan Interest Deduction which can be taken by qualified filers. The deduction allows for any paid interest to be deducted from amount of income earned annually and provides a valuable tool to help balance finances for those in the throngs of repayment.

Eligibility

Any loan taken out for the sole intention of covering eligible expenses related to the pursuit of a higher eduction is considered a “qualified” student loan with deductible interest. The elegibility of expeneses includes those for which the Tuition and Fees deduction is applicable.

Those attempting to claim the deduction must be indepedent of caregivers and cannot be considered an dependent or exemption on any other tax return. The deduction also carries other conditions and must meet certain criteria related to annual income, a legal obligation to pay interest, and the amount of interest actually paid during the year one is filing.

Interest on student loans can get overwhelming. Luckily, the IRS allows for the Student Loan Interest Deduction which can be taken by qualified filers. The deduction allows for any paid interest to be deducted from amount of income earned annually and provides a valuable tool to help balance finances for those in the throngs of repayment.

Eligibility

Any loan taken out for the sole intention of covering eligible expenses related to the pursuit of a higher eduction is considered a “qualified” student loan with deductible interest. The elegibility of expeneses includes those for which the Tuition and Fees deduction is applicable.

Those attempting to claim the deduction must be indepedent of caregivers and cannot be considered an dependent or exemption on any other tax return. The deduction also carries other conditions and must meet criteria related to annual income, a legally-observed obligation to pay interest, and the amount of interest actually paid during the year in which one files.

Married couples can claim the interest deduction only when filing jointly. The IRS allows one to deduct up to $2,500 annually for any interest paid on student loans which meet federal requirements. Any amount of interest above the threshold of $2,500 doesn’t count, nor can any deduction exceed the actual amount of interest paid.

Interest generated via the various types of educational loans can qualify for the deduction, including: interest on the loan itself, interest on any consolidations, and interest accumulated via lines of credit. The most important qualifier for determining eligible interest involves the intention of money borrowed, any money was used for educational expenses is generally applicable.

Deductions Versus Credits

Tax deductions differ from credits. Credits reduce the total of tax owed whereas deductions reduce the amount of income which can be taxed. The Student Loan Interest Deduction can be taken for up to $2,500 of any interest actually paid in the previous tax year. Deductions lower one’s revenue by the amount of the deduction. Therefore, the actual amount of income tax is lowered along with the tax burden and total bill which one pays.

Forms

Appropriate filing procedures for the Student Loan Interest Deduction are claimed as an adjustment to income, and therefor do not need to be itemized. Filers cannot take such deductions on Form 1040EZ. However, the deduction can be taken on line 18 of Form 1040A or on line 33 of Form 1040, both of which can be submitted via the free IRS efile process.

The cost of college seems never-ending to someone in the doldrums of student loan debt. However, interest paid can often be replenished via a tax return for those who qualify, which helps ease the burden. As with most tax scenarios, understanding the proper filing procedures and following the correct protocol can contribute to a much larger tax reimbursement.

Citations:

Katei Cranford is a writer who shares her expertise of financial situations for students and graduates.

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The Pitfalls Of Doing Your Own Taxes

Doing your own taxes might seem like an easy enough thing to pull off. You just get your W-2 form, put in the numbers and you are good to go. However, there can be more to doing your taxes than just simple math, and even that can be hard to do for some people. While it might not be fun to have to pay someone to do your taxes, it can save you a lot of headaches down the line.

You Could Get The Numbers Wrong

Doing your own taxes means inputting your own information. If you have a W-2 and you are using software, this should be no problem. However, if you are self-employed, or are doing taxes by filling out a form by hand, it can get a little tricky. Instead of knowing that you have made 5,294 dollars during the year, you guess and just say 5,000 dollars. The IRS is not going to like that you have under reported income.

Even if you do get the numbers wrong, but correct it, you can still find yourself in trouble. The IRS tends to audit returns more if there are a lot of eraser marks, or if the numbers look fudged. If you have to do it yourself, at least use software to do so.

You Might Miss A Deduction

A taxpayer doing their own taxes might not realize that the new computer software used for marketing your business is actually a deduction, or that part of your home utility bills can be deducted if you run your business in your home. Not knowing all the deductions that are available to you can leave you owing more to the IRS and that can hurt even more in the down economy

Conversely, the taxpayer who is going it alone might give a deduction that is not legal. A new grandfather clock placed in your office isn’t necessarily a deduction. Driving to a convention in Miami with your family is only partially deductible. Knowing what is a deduction and what is not can get you into trouble come tax time.

Poor Record Keeping Can Kill Your Chances

Having someone do your taxes could salvage a decent return if you don’t do well keeping your own records. A tax professional can clue you in to good software that can organize all your invoices and bills that are relevant to your taxes. Also, a professional might know where to go to get another W-2 form, or how to get another copy of a 1099.

If you have a professional doing your taxes, that person can go through your records and pick out the relevant expenses and income that should go on your return. Getting an audit can be easier to deal with knowing that some professionals will have some sort of audit defense service where they will go in front of the IRS with you for a fee.

Doing your taxes on your own should be a relatively easy venture. However, making even a minor mistake can wind up with you getting an audit of some sort. Missing a deduction, or not claiming all of your income due to poor record keeping, or thinking you could pull one on the IRS, can be even worse. If in doubt, go to a professional for advice.

Miles Walker blogs about car insurance quotes over at CarInsuranceComparison.Org. He recently looked at Arizona car insurance.

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Tax Tricks for Homeowners

Tax Tips & Tricks for Homeowners

Although gaining the status of homeowner can be a monumental moment in your life, the responsibility and excitement can often overshadow one of the most appealing aspects of owning your home: tax deductions and savings! In fact, every bit of your property taxes and mortgage interest can be itemized on your taxes and result in impressive savings.

Savings that accompany homeowner-ship can pave the way for allowing you to afford a home they you may not otherwise be able to even consider. In addition to property taxes stemming from mortgage interest and property taxes, you can also deduct some of your closing costs. Profits that are gained after a home is sold are tax deductible, highlighting yet another benefit you can experience through the purchase of a home. Saving money and taking advantage of being a homeowner is easy with these simple tax tips and tricks:

You Got to Itemize

While you may ultimately discover that accepting the standard deduction provides you with the greatest tax benefit, it is worth the effort and time to insure that itemizing does not provide greater savings. Itemizing can give you a way to compare what you could receive with the standard deduction you may have always taken when filing taxes in the past. Whether you are using tax software or completing your taxes by hand, take the time to itemize and insure you will receive the highest benefits possible accompanying your status as a homeowner.

Home Office Deductions

It can be an obvious fact that deducting a home office on your taxes can provide savings, but it is important to weigh the benefit of annual home office deductions with capital gains taxes. Capital gains taxes are only exempt for residences, making the deduction of a home office a problem if you hope to receive such exemptions if you sell your home in the future. Seeking the help of a tax professional can be a great way you can discover whether the deductions that come with a home office are worth taking in contrast with capital gains exemptions.

Foreclosures, Short Sales and Loan Modifications

One of the risks of buying a home is the high levels of foreclosures and other struggles homeowners can run into. But while losing one’s home is a risk we take when purchasing property, the current housing outlook gives us some protection if you do ever have to endure such hardships. Although a mortgage may be erased if foreclosures, short sales or modifications occur, the mortgage amount will still be taxed as a Cancellation of Debt Income, according to the IRS. Losing a home to foreclosure can be trying enough, but after 2012, exemption from paying taxes on lost property or modified loans will come to an end. The Mortgage Debt Forgiveness Relief Act is only good until 2012, making it much less risky for you to purchase a home before the act expires.

Is Refinancing for You?

Refinancing has been a hot topic as of late. In fact, you may have friends and family rushing to refinance their home in order to take advantage of historically low interest rates. While refinancing can be a good option, it can result in some lost tax savings that could have outweighed the interest rate savings you expected. A lower interest rate that results from refinancing your home can actually result in lower tax savings. The bottom line: paying lower interest as a result of refinancing your home will result in less tax savings.

Closing Costs

With the excitement of home ownership and purchasing property, it can be easy for you to overlook the closing costs that can be deducted from taxes, just as mortgage interest and property taxes can. Whether you paid the closing costs for the home you bought or plan on purchasing or the seller paid them, closing costs are tax deductible. How much you paid, or the seller paid, for closing, can be found on your HUD-1 form or by calling your realtor.

Anastacio Mindiola is an accomplished attorney and business owner. His company helps home and business owners protest property taxes in Houston and the surrounding counties. For more information on how you can lower your property taxes visit https://republicpropertytax.com/.

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