Category Archives: Tax

Mar
31
2023

Maximize Your Tax Return With Miscellaneous Deductions

Tax season is almost here and Certified Public Accountants continue to watch the news on “fiscal cliff” updates. Tax season could become more difficult for tax payers as the news on tax credits continues to be up in the air. In order to minimize any liability, folks need to pay attention to miscellaneous deductions. No matter how small or insignificant you may feel they are, the sum of all the “other” deductions may help a great deal on your final tax return.

The IRS provides standard deductions for every tax payer. Depending on your filing status and how many dependents can be claimed, the deduction is often a decent amount. All itemized deductions are reported on Form 1040 Schedule A. There are also some “miscellaneous deductions” which can also be claimed on this for. Meet with your local CPA to maximize your tax return.

Miscellaneous deductions are broken down into two groups.

*Those deductions which are subject to a “2% rule” – money amount which is equal to two percent of the adjusted gross income; which is the last line on the first page of the 1040 form.

*Those deductions which do not fit under the other rule.

There are specific deductions which can be subject to the 2% limit rule. Your Certified Public Accountant will fit the deductions in the proper categories.

*Medical and dental expenses have their own percentage limit, (7.5% for your adjusted income).

*If you were searching for a new job, work clothes or uniforms, tools, union dues, or work related travel and transportation, you can claim these unreimbursed expenses.

*Deduct your tax preparation expenses!

*Certain investment or legal fees

*Safety deposit rental fees which are not used for personal effects, i.e. jewelry.

*See your CPA for the full list of possible deductions.

Miscellaneous deductions which are not subject to the 2% limit affect less of the population of tax payers but are important nevertheless to those who can claim them should be deducted as well. An example of such deductions would be: impairment-related work expenses for those with disabilities or casualty and theft losses from property which produces income. The CPA will make sure that any and all deductions which pertain to your personal situation will be utilized when preparing your tax return. Using deductions properly will optimize your results. Any liability will be minimized and a tax refund will be maximized.

The earliest date the IRS will accept e-files is January 22, but it is never too early to start organizing your tax documents. There is no early request for tax returns. If you organize your deductions, the time spent on preparing your tax return will be less. If you have your documents saved and organized throughout the year, you will limit the amount of time scrambling for this or that receipt. Your CPA will request documentation for all deductions. Have them ready to go when your CPA is ready to prepare your return.

Dec
03
2022

Account For Property Tax When Home Shopping

Home shopping can be fun but when you think the time is now to invest in a property, you are leaping into a major financial commitment. Prior to your home purchase, you are actually entitled to pay off several expenses aside from the purchase price. And property taxes are included in your home acquisition repertoire. You have to do a little research whenever you do your home shopping. It is like canvassing products and equipment before riding the purchase bandwagon.

Property taxes can make any home shopper groan. Home buyers certainly do not like handling property taxes and the processes that it entails which is something they are likely have to deal with beforehand. Multitudes of home shoppers that have mortgage loans set up accounts whenever they close on a home purchase. From this account, property taxes are paid as well as insurance premiums. In some cases, many homeowners may want to take out the property taxes from this account and directly pay the taxes.

However, this can be difficult, that is why having an account for your property tax is much advisable.
Say, for instance, that you are shopping for a home. But reality and questions set in who will be responsible for paying the property tax at some point in the first quarter of your home acquisition. Usually, property taxes are classified as pro-rated meaning that sellers are responsible for paying the taxes until the closing date. From that date on, you will be held accountable for the property tax payments as home buyer.

So what is this account for property tax when home shopping? If you have a loan officer, he or she will provide you good faith estimates which reveal just how much you will be depositing into an Escrow account for property tax payments in the future. This account also includes putting in your homeowners insurance.

What will happen next is, you have to send payment for your property tax every month by using the Escrow account. Basically, property taxes are due annually so your account will hold your property tax payments every month until the time they are due. Note that the account for property tax does not create an interest for banks as it is merely a holding account that is useful and convenient for your expenses. If you have applied for loans when home shopping, the bank or loan company will pay the taxes for you at the time they are already due.

An Escrow account is basically a special savings trust account with the name of the borrower to pay the property taxes. You can deposit your savings in a bank or financial institution which are held and segregated for specific purposes such as your property tax. Indeed, having this type of account comes in handy whenever you are going home shopping. Escrow accounts enable you to purchase the home you want as you are confident you have adequate funds to finance property taxes and insurance pay offs.

However, do not be lenient when it comes to having this type of account for property tax whenever you go home shopping. You need to pay sufficient money to cover anticipated property taxes, insurance, and other estimated taxes. The money should be fairly paid into the account. Furthermore, when home shopping, keep in mind that you must be current in your loan payments to acquire your ideal home and pay off property taxes.