Monthly Archives: July 2012

What you need to know… About Common Errors with Deductions”

It important when dealing with the IRS to make every effort to lower your tax burden, however, you must stay within the guidelines that are laid out in the tax laws of your state and the United States Statutes. Some taxpayers are missing some of the deductions due to them. Research has shown that the biggest mistake they make when completing their return is their social security number. The tax laws are complicated and there are so many deductions, it makes your head spin.  Here are some commonly overlooked deductions:

State Sales Tax is deductible and especially welcome in the states with no state income tax. You must chose to deduct the state income tax or the sales tax. You cannot do both. There is an IRS table and calculator to figure your deduction, at their website. This is especially helpful when you have large purchases during the year such as car, major remodeling along with all the new appliances, boat etc.

Reinvested Dividends – check with the mutual fund company to determine your taxable capital gain changes.

Out of Pocket Charitable Contributions can add up quickly. Keep your receipts from donating foods to charity, or ingredients to a fundraising event raising funds for charity.

Student Loan Interest paid by Parents The IRS treats the payback money from parents as a gift to the child and you may deduct up to $2,500 of a qualified student loan interest paid by parents. All of the following must apply for this deduction: You paid interest on a qualified student loan in the tax year 2011. You are legally obligated to pay interest on a qualified student loan. Your filing status is not married filing separately. Your modified adjusted gross income is less than a specified amount, which is set annually. You and your spouse, if filing jointly, cannot be claimed as dependents on someone else’s return.

Job Hunting Expenses are deductible not to exceed 2% of your adjusted gross income. If you are looking for the same kind of job you had before being laid off, you can deduct job-searching costs as a miscellaneous expenses on your itemized tax return. The allowable deductions are food, lodging, transportation if search takes you away from home overnight, cab fares, employment agency fees, costs of printing resumes, business cards, postage and advertising. You must itemize to get this deduction. These expenses are deductible even if you do not find employment.

Cost of Moving for your first job is deductible if the move is more than 50 miles away from home. The deduction includes the cost of getting you and your household goods to the new location. If you drive your own car deduct your mileage as well. If you are a member of the armed forces and your move was due to a military order and permanent change of station, you do not have to satisfy the “distance or time tests.” You must use Form 3903 to figure your moving expense deduction. You can deduct your un-reimbursed moving expenses.

Military reservists’ travel expenses are deductible when traveling more than 100 miles away from home for meetings and drills. You may deduct one half of meals and lodging. You are not required to itemize with this deduction.

New Deduction for Medicare Premiums is the latest deduction of interest to sole proprietors; partners, limited liability company members and S corporation shareholders can deduct qualified health insurance premiums paid to cover themselves and family members. This is the so-called self-employed health insurance deduction, which includes Medicare Part B premiums. As a bonus, you can subtract your self-employed health insurance premiums (the amount claimed on Line 29 of Form 1040) from the self-employment income when calculating your self-employment tax bill.

What you need to know… About Buying Discounted Mortgages

Mortgages, also known as notes or trust deeds have a category called ‘discounted’ mortgages.   Discounted mortgages are bought for a variety of investment reasons.  They can be held as long term investments or resold to other investors for immediate profit.  Even in today’s market discounted mortgages are held as safe and secure future profits. It may seem impossible to see the words ‘safe’, ‘secure’, and ‘profits’ when reading about a subject matter pertaining to mortgages, but be aware that investing is still taking place and people are still making profits.  The most important thing to know as you continue reading this article is that seeking out the advice of your CPA before making any investment decision is still the best advice anyone can provide you.

This article will only be addressing two key components of buying discounted mortgages.  For more in depth coverage speak with your mortgager, CPA, bank, real estate professionals, and further investigate the possibilities through the Internet How to Buy Discounted Mortgages

If you want to buy discounted mortgages the first real step is to educate yourself and network your way to success.  Make friends with real estate professionals.  Begin by cultivating a mortgage garden of real estate agents and brokers.  Since there is no ready-made market for discounted mortgages, the first person a mortgage holder would think to call is someone in the real estate business.  By making friends with several real estate professionals and letting them know of your interest in purchasing discounted mortgages, you’ll uncover a never ending supply of discounted mortgages.  One of the most important things you can do at this point in your venture is to initiate a process for identifying where your trust and your investment is best supported.

The next step is checking the credit history of the mortgagor before buying any discounted mortgage.  Carefully check the credit rating and credit history of the mortgagor as they are the person who will be responsible for making the payments on the mortgage.  Since the mortgagor has been making payments to the mortgage seller for some time, it is important to obtain verifiable proof of the timeliness of the payments.  If you have over $15, 000 of total investment capital, discounted mortgages should be a serious consideration.  However, don’t invest more than 30% to 50% of your capital in mortgages, since your investments can be tied up from two to ten years.  Have your attorney (or an attorney) handle the mortgage transfer and record the mortgage at the courthouse, giving you a priority claim against most other subsequent loans or mortgages

After collecting all the information on your first potential purchase of a discounted mortgage, and prior to attaining an attorney, contact your tax professional and present them with the information you have collected.  This will require a tax discussion.  You should always consult with your tax professional prior to any investment.  They will apprise you of the tax laws and any timeframe constraints encompassing the purchasing of a discounted mortgage.  Your tax professional will assist you in determining whether this form of investment would produce a negative or positive affect on your tax structure and provide you with a preview regarding the process for filing your yearly tax return.  According to your individual situation your tax professional will be able to advise you and file your returns correctly.