Re-posted with the permission of Gary Welch
We’re about a month away from the tax deadline and if you haven’t already filed your taxes, please review these Tax Tips…it may be beneficial for you.!
As most everyone is aware, Congress and the President came to agreement on extending the Bush era tax code. The existing income tax code is basically being extended for 2 more years. This extension is perceived to be a good stimulus tool to try to help the economy continue to rebound. Time will tell as to its effectiveness.
There are several changes in the new tax law that will help most individuals going into 2011. Some of the more important are:
• reduce payroll taxes by 2% – this is an across the board cut for all taxpayers
• estates are not taxable unless they exceed $5M
• unemployment benefits extended for 13 months for the long term unemployed
• reduction or elimination of the Alternative Minimum Tax for middle income taxpayers
If you bought a home in 2008 and claimed the first time homebuyer credit ($7500) it is now time to begin to re-pay that credit. The first installment is due with your 2010 tax return and is re-paid over 15 years. The 2008 credit is different than the first time homebuyer credit that was offered in 2010. The 2010 credit does not have to be re-paid as long as you live in the house for at least 2 years.
Due to a recent tax-law change, you may be able to claim an enhanced “residential energy credit” for qualified energy-saving improvements.
While Congress discussed limiting or reducing the amount of tax benefit associated with mortgage interest the final bill made no changes. A taxpayer may deduct interest on a mortgage up to $1M on a 1st mortgage and $100,000 on a 2nd mortgage or home equity line of credit. This deduction will almost certainly be up for discussion again in 2 years.
As always, it is important to consult with your tax advisor before implementing any tax saving or tax avoidance plans.
Vice President, Sun Trust Mortgage