Some Important Facts to Consider.....

It's almost tax time and here is some important information to consider......

Stimulus Rebate PaymentMost - taxpayers received a rebate payment in 2008. This payment is NOT taxable, however, it must be accounted for on your 2008 tax return. Please make sure that I have the amount you received with your other tax data.

Property Tax Deduction for Non-Itemizers - If you own a home and do NOT itemize your deductions (Schedule A), we can take a property tax deduction for property taxes you paid in 2008. Please make sure that I have evidence of your property tax payments for 2008.

Mortgage Interest Deductions - As a result of increased IRS audits, I will be looking closely at the deductibility of mortgage interest payments on your 2008 tax return. Taxpayers are allowed to deduct interest on the acquisition debt incurred to purchase, construct or substantially improve their principal or secondary residence. Combined acquisition debt on the two homes can NOT be more than $1,000,000 plus an additional $100,000 equity loan. As your loan is paid down, the amount of deductible acquisition debt decreases. As a result of repeated re-financing of mortgage indebtedness, a taxpayer's current home mortgage may exceed the original adjusted acquisition debt plus $100,000. If you fit into this category, part of your mortgage interest may not be deductible. For example, in 1970 a taxpayer purchased a home for $28,000. The loan was paid off long ago. In 2006 when the house was worth $850,000, taxpayer took out a $400,000 loan against the home to pay some bills, help the kids and take a vacation. Since the acquisition debt had previously been paid off, only the interest on $100,000 is deductible.

First Time Homebuyer Credit - A first time home buyer in 2008 (neither taxpayer or spouse owned a principal residence in the U.S. during the three year period prior to purchase of the new home) is eligible for a refundable tax credit. The amount of the credit is the lesser of 10% of the purchase price or $7,500 ($3,750 if you are single). While this is called a "tax credit", and technically, it is, it is really a loan that has to be paid back annually over 15 years.

Foreclosure/Repossession/Insolvency/Debt Relief - Unfortunately, due to the current economic downturn, some taxpayers have lost their homes during the past year through foreclosure or repossession. This situation presents a complicated tax issue. If any of you find yourselves in this situation, please contact me as soon as possible prior to your tax appointment to determine what information I will need to accurately prepare your 2008 tax return.

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