This is the second in a four-part series on home mortgages. (Click here to read Part 1 – The Home Mortgage Interest Deduction) We will examine what can be deducted as home mortgage interest. Interest on the debt is deductible up to the statutory limits on the amounts of deductible debt ($1,000,000 for acquisition debt, $100,000 for home equity debt). Interest on excess debt is personal debt and not deductible. In addition, any amount of home equity or refinanced debt that is not used build, buy, or improve the residence is also classified as non-deductible personal debt.
Tag Archive for taxpayers
The Premium Tax Credit, under the Affordable Care Act, is a refundable tax credit that helps eligible people with moderate incomes afford health insurance purchased through the Health Insurance Marketplace.
If you are eligible for the credit, you can choose to:
• Get it now: Have some or all of the estimated credit paid in advance on your behalf directly to your insurance company, to lower what you pay out-of-pocket for your monthly premiums during 2015. These payments are called advance payments of the premium tax credit.
• Get it later: Wait to get the credit when you file your 2015 tax return in 2016. This means, then, that no Read more
Republican presidential candidates Senators Ted Cruz and Mike Huckabee would like to abolish the IRS. They are not saying they want to abolish taxes, just the agency that collects them. Even if either is able to simplify taxes to the point that no taxpayers have questions or need guidance, we still need a tax collector, as well as an auditor to ensure compliance.
A call to abolish the IRS is a distraction. That’s too bad because there are significant improvements needed to our federal tax system – a system that includes not only the income tax, but also employment, excise and estate and gift taxes. Tax reform must be the focal point, not termination of the entity that collects revenues to fund schools and roads, provide national defense, and much more.
The IRS is an easy scapegoat for complaints about our tax laws. But those laws come from Congress. Yes, the Read more
The IRS sends many, many, many, letters and correspondence before they levy or garnished any Taxpayer’s wages, bank accounts, or other assets. Many taxpayers take the ostrich approach and ignore the problem, in hopes that it will go away.
If you’re facing an IRS Problem, appropriate action can go a long way towards resolving it!
1. Respond Quickly to All Inquiries and Notices
The IRS will send a notice or letter if:
• You have a balance due. Read more
We previously posted on November 2, 2015, Republican and Democratic Lawmakers Vow to Push Tax Treaties Delayed by Sen. Paul! where we discussed that over a year ago, we posted U.S. Senator Rand Paul Continues To Block 5 Important Tax Treaties where we discussed that the U.S.-Switzerland tax treaty remains stuck in the Senate after Sen. Rand Paul (R-Ky.) blocked an effort to propel it forward by Senate Foreign Relations Committee Chairman Robert Menendez (D-N.J.) When a bipartisan Senate panel lambasted Swiss bank Credit Suisse for helping rich Americans evade billions in taxes, some watching the high-profile hearing couldn’t help but notice that Sen. Rand Paul sticks out like a elephant in the room. Senator Rand Paul on Wednesday June 4, 2014 again blocked the U.S. Senate from moving toward ratifying five pending tax treaties, saying they would make it easier for foreign governments to invade the privacy of Americans. Now Treaties with: Read more
According to the Internal Revenue Service:
Since OVDP Began in 2009, There Have Been > 54,000 Disclosures!
The IRS has collected > $8 Billion.
We previously discussed this in our post “Offshore Compliance Programs Generate $8 Billion” However, the figures have risen sharply since the IRS’ last progress report in January this year, when it announced that the OVDP schemes had attracted 54,000 disclosures and USD7 billion in tax.
It is believed that most of the additional 30,000 taxpayers who have volunteered since then, have been attracted by the ‘streamlined’ program launched in June 2014 for ‘non-wilful’ taxpayers. This program originated from the IRS’ Read more
IRS Urges People to Take Advantage of Voluntary Disclosure Programs… You Think?
The IRS released IR-2015-116 on Oct. 16, 2015, to remind U.S. taxpayers with undisclosed offshore accounts, that with more than 54,000 taxpayers coming in to participate in offshore disclosure programs since 2009, they should strongly consider existing paths established to come into full compliance with their federal tax obligations.
Both the Offshore Voluntary Disclosure Program (OVDP) and the streamlined procedures enable taxpayers to correct prior omissions and meet their federal tax obligations while mitigating the potential penalties of continued non-compliance. There are also separate procedures for those who have paid their income taxes but omitted Read more
It’s November! I am always surprised by it’s arrival and the realization that it’s year-end tax planning time. The shortened day-light hours seem to make that certain without a doubt. So let’s roll-up our sleeves, get down to work and fine-tune possible last-minute strategies for lowering your 2015 tax bill.
Tax Brackets: Let’s take a quick look at the 2015 tax brackets, you will see from the table below that the top tax rate of 39.6% will apply to incomes over $$413,200 (single), $464,851 (married filing jointly and surviving spouse), $232,426 (married filing separately), and $439,000 (heads of households):
The 3.8% net investment income tax and/or the 0.9% Medicare surtax will also apply if you Read more
More than 50 tax provisions that Congress routinely extends on a yearly basis expired at the end of 2014. The big problem is each year they are extending the provisions later and later in the year creating uncertainty for taxpayers on whether they can depend on these tax incentives or not. This makes tax planning unclear and leaves taxpayers wondering about their projected tax liability.
For 2014, Congress waited almost to the end of the year to apply many of the provisions to the 2014 tax year. This was not only a problem for taxpayers but also for the IRS, which needed to adjust its forms and tax filing software at the last minute and actually had to delay the start of the tax season. Read more
Tax Court Did Not Consider To Be A Valid Return
In Reifler, TC Memo 2015-199TC Memo 2015-199, the Tax Court recently held that a joint return not signed by the wife was not a valid return and, as a result, imposed the failure-to-file penalty. In so doing, it rejected the taxpayer’s arguments that the return was valid either because it substantially complied with the valid return rules or because the wife intended to file a joint return and tacitly consented to the filing of a joint return.
Signatures on a tax return not only verify that a return has indeed been filed by the person indicated on the front page of a Form 1040 but also certify that all the statements in the tax return are made under penalty of perjury and are true, correct, and complete to the best of Read more
Looking ahead to the filing season for this year’s tax returns, a frequent question is whether you should keep track of tax-deductible expenditures or simply settle for the standard deduction amount.
Whether you can itemize deductions on your tax return depends on how much you spent on certain expenses during the year. Money paid for medical care, mortgage interest, taxes, charitable contributions, casualty losses and miscellaneous deductions (usually job or investment related) can reduce your taxes. If the total amount spent on those categories is more than the standard deduction, you can usually benefit by itemizing.
The standard deduction amounts are based on your filing status, your age and whether or Read more
Court Authorizes IRS to Issue Summonses to Discover U.S. Taxpayers with Offshore Bank Accounts at Belize Bank International Limited and Belize Bank Limited
According to the DoJ, a federal court in Miami entered an order authorizing the Internal Revenue Service (IRS) to serve a “John Doe” summons seeking information about U.S. taxpayers who may hold offshore accounts at Belize Bank International Limited (BBIL) or Belize Bank Limited (BBL), the Justice Department announced today.
The order, which was entered by U.S. District Judge Ursula Ungaro, granted the United States’ petition for permission to seek records of BBIL’s and BBL’s correspondent accounts at Bank of America, N.A. and Citibank, N.A. Those records will allow the IRS to Read more