Mortgage News in the Carolinas
Posts tagged IRS
Military Members : You Have 3 Weeks To Buy A Home, Claim Up To $8,000 In Tax Credits
0305 days
by Geoff Brown
in Taxes
If you’re an eligible federal employee or qualified military personnel, you have 3 weeks from this Saturday to use the federal home buyer tax credit, and to claim up to $8,000 in federal income tax credits.
According to the IRS, eligible persons include members and spouses of the uniformed services, members and spouses of the Foreign Service, and intelligence community employees who served at least 90 days of qualified, extended duty service outside of the United States between January 1, 2009 and April 30, 2010, and their spouses.
Eligible persons must be under contract for a new home on or before April 30, 2011, with the home’s closing occurring on or before June 30, 2011.
The federal home buyer tax credit is a true credit, too. Eligible buyers receive a dollar-for-dollar tax reduction equal to 10 percent of the subject home’s purchase price, not to exceed $8,000 for first-time home buyers, and not to exceed $6,500 for repeat home buyers.
Repeat buyers must have lived in their “main home” through 5 of the last 8 years in order to be eligibke.
Furthermore, both the buyer(s) and the subject property must meet certain minimum eligibility requirements:
- The home may not be purchased from a parent, spouse, or child
- The home may not be purchased from an entity in which the seller is a majority owner
- The home may not be acquired by gift or inheritance
- The home sale price may not exceed $800,000
- Buyers may not earn more than $125,000 as single-filers; $225,000 as joint-filers
The complete program description is published on the IRS website.
For additional information regarding your tax credit eligibility, you may want to speak with an accountant or other tax professional. It’s often worth the cost.
Federal Income Tax Deadline Extended To April 18, 2011
0335 days
by Geoff Brown
in Tax Tips
April 15 is the traditional due date for federal income taxes. It’s a deadline so ingrained in the American psyche that the April 15 calendar date is often called, simply, “Tax Day”.
In 2011, however, federal taxes aren’t due April 15. They’re due April 18. It’s because of a combination of holiday, calendars, and tax law.
The change centers on Emancipation Day.
Emancipation Day is a public celebration in the District of Columbia. Named a holiday in 2005, Emancipation Day honors President Abraham Lincoln’s April 16, 1862 signing of the Compensation Emancipation Act.
Emancipation Day is a non-working day in the nation’s capitol but, this year, Emancipation Day falls on a Saturday. The municipality will observe the holiday Friday instead. This means that all of Washington, D.C. will be “closed” Friday, April 15 — the usual tax filing deadline date.
This includes the IRS.
Therefore, to accommodate Emancipation Day, the government is extending this year’s federal tax filing deadline to April 18, 2011. This year marks the second time Emancipation Day has forced the change of federal tax filing deadlines.
Also, as a non-related coincidence, tax filers in Carolinas taking extensions to October 15 will also get a few extra days. October 15 is a Saturday so the extended tax deadline rolls over to the following Monday — October 17, 2011.
Military Personnel Can Still Claim The $8,000 Homebuyer Tax Credit
0337 days
For certain members of the military, and for certain federal employees, there’s just 2 months remaining to get use the federal home buyer tax credit.
Eligible persons include members of the uniformed services, members of the Foreign Service, and intelligence community employees who served at least 90 days of qualified, extended duty service outside of the United States between January 1, 2009 and April 30, 2010.
Spouses of persons meeting the above criteria are eligible as well.
The federal home buyer tax credit ranges up to $8,000 for first-time home buyers, and up to $6,500 for existing homeowners. Existing homeowners must have lived in their “main home” through 5 of the last 8 years to be eligible.
Claiming the federal tax credit is a two-step process. First, eligible persons must be under contract for a new home on or before April 30, 2011. The home’s closing must then occur on or before June 30, 2011.
The IRS does not make date exceptions.
Furthermore, both the buyer(s) and the subject property must meet certain minimum eligibility requirements:
- The home may not be purchased from a parent, spouse, or child
- The home may not be purchased from an entity in which the seller is a majority owner
- The home may not be acquired by gift or inheritance
- Each buyer must meet tax credit eligibility standards
- The home sale price may not exceed $800,000
- Buyers may not earn more than $125,000 as single-filers; $225,000 as joint-filers
The complete program description is published on the IRS website.
Another important note is that the IRS is giving eligible buyers a tax credit as opposed to a deduction. This means that a taxpayer qualifying for the full $8,000, and for whom the “normal” 2011 federal tax liability is $8,000, will have zero federal tax liability in 2011.
For additional information regarding your tax credit eligibility, call an accountant. Speaking with a tax professional is often worth the cost.
Boost Your 2010 Tax Deductions By Making Your January Mortgage Payment A Little Bit Early
0426 days
by Geoff Brown
in Tax Tips
Looking for an extra 2010 tax deduction? Consider making your January mortgage payment a few days early.
It’s a simple strategy that works because of how mortgage interest works.
Unlike rent which is paid in advance at the start of a month, mortgage interest is only paid after it’s been borrowed. Your January mortgage payment, therefore, accounts for the interest that accrued in December.
And for a lot of Charlotte homeowners, that mortgage interest is tax-deductible.
By making January’s mortgage payment in December, eligible homeowners can apply the interest paid to 2010′s tax returns instead of waiting to claim the same deduction against 2011. Don’t cut it close, though. It’s best to remit payment prior to the last week of the month, leaving your servicer ample time to receive and process your paperwork.
Most importantly, though, before prepaying on your mortgage, talk to your tax professional.
Not every homeowner is eligible for mortgage interest tax deductions, nor should every homeowner itemize their respective tax deductions. The “pay early” plan could be a wasted effort for you, ultimately, depending on your taxpayer profile.
If you don’t have an accountant that you trust, call or email me anytime; I’m happy to make a recommendation to you.
