Latest news with #ABTaxLaw
Yahoo
14-04-2025
- Business
- Yahoo
Can Homeownership Lower Your Taxes? Here Are 6 Expert Tips To Help You
What tax benefits does owning a home offer? There might be some that homeowners are missing out on. Learn More: Read Next: Here are some of the ones experts recommended looking into before homeowners file their taxes. Greg Clement, CEO and founder of Freedomology, an app designed to help people achieve financial freedom, pointed out that the mortgage interest deduction is probably the most popular way homeowners benefit when it comes to taxes. With it, homeowners can deduct home mortgage interest on the first $750,000 ($375,000 if married filing separately) of debt. Check Out: Clement highlighted property taxes as another expense that can be written off. Just keep in mind that the deduction for state and local taxes, including real estate taxes, is limited to $10,000. For married couples filing separately, the limit is $5,000. For those who work from home, Clement pointed out that there is a deduction for home offices for the right type of employee. 'If you work from home you might qualify for a home office deduction if you are self-employed. W-2 employees are out of luck,' he said. For those who have the means, Clement recommended renting out part of a home or the entire place to be eligible for certain tax benefits. 'If you're renting out part of your home, like an Airbnb or a basement apartment, you can deduct a percentage of your utilities and maintenance. That's free money most people never take advantage of,' he said. 'Some states offer property tax exemptions for seniors, so it's always worth looking into,' Clement said. This usually applies to homeowners 65 and older, though some states give tax breaks to those as young as 61. In states like New Hampshire, seniors benefit from increased tax exemption as they get older, according to The Mortgage Reports. However, some of these exemptions might not be available if a senior's income is more than a certain amount. Those who make sustainable changes to their homes may be eligible for energy-efficient property credits. 'If taxpayers are in a position to put solar panels on their home or make other energy-efficient improvements, then that can be a great method of reducing your energy bills and claiming a significant tax credit,' said Adam Brewer, an attorney at AB Tax Law. Overall, there are many tax deductions homeowners may be able to qualify for. Clement cautioned that not everything is tax deductible, but it's still important to keep track of upgrade costs. 'Some homeowners think everything they spend on their home is deductible, but that's far from the truth. You can't deduct a new hot tub or the pool you just put in, no matter how nice they are. However, if you're making major upgrades, keep track of them anyway. They could lower your capital gains tax bill when you sell the house,' he said. More From GoBankingRates6 Reasons Your Tax Refund Will Be Higher in 2025 7 Tax Loopholes the Rich Use To Pay Less and Build More Wealth 25 Places To Buy a Home If You Want It To Gain Value This article originally appeared on Can Homeownership Lower Your Taxes? Here Are 6 Expert Tips To Help You
CBS News
01-04-2025
- Business
- CBS News
How to qualify for IRS tax forgiveness, according to experts
With the tax filing deadline fast approaching, millions of Americans are rushing to finalize their returns. This time of year can be extra stressful if you have unpaid IRS taxes from previous years and owe more this year. Back taxes often snowball into a financial burden with growing penalties and interest. The IRS can also levy bank accounts, place liens on your property, garnish your Social Security disability check and damage your credit score. These repercussions underscore the importance of tackling this debt promptly. The good news is that several relief programs exist for struggling taxpayers. These could reduce or eliminate what you owe under certain circumstances. So it helps to know the qualifying criteria. Below, we spoke to experts about what to know, specifically. Start tackling your tax debt here now . Tax problems rarely resolve themselves and often compound over time. "In my experience, if you owed last year, then you'll probably owe this [year] and next year," warns Adam Brewer, tax attorney at AB Tax Law. With ongoing tax obligations mounting, many taxpayers need relief options. Joseph Leocata, JD, a certified public accountant and tax controversy advisor with Berkowitz Pollack Brant Advisors + CPAs, says tax forgiveness becomes viable "when the balance becomes insurmountable, when facing financial hardship or if the IRS intensifies collection actions." Below are three tax relief avenues to explore: "An offer in compromise is an agreement with the IRS to settle your tax debt for less than you owe," explains Logan Allec, a certified public accountant and owner of Choice Tax Relief. The IRS accepts offers in compromise through the following approaches: Of the above, "the most common is doubt as to collectibility," Allec says. Applying for it involves these steps: After reviewing your financial information, the IRS calculates your reasonable collection potential. For your offer to succeed, Allec notes that "your offer amount should be at least the amount of your reasonable collection potential." Explore your tax debt forgiveness eligibility here . Penalty abatement offers relief from the additional charges the IRS adds to your tax debt. "In certain circumstances, the IRS may fully or partially abate — that is, forgive — the penalties it has assessed against you," Allec explains. The IRS offers two main types of penalty relief: The IRS has 10 years from the date of assessment to collect a tax. "We've seen millions of our clients' tax debts written off due to the IRS's collection statute expiring," Allec says. Sometimes this happens without effort if the IRS isn't actively pursuing collection. But in many cases, tax professionals help clients enter formal arrangements such as "currently not collectible" status. Though this doesn't get rid of the debt right away, it could delay aggressive collection actions until the statute expires. Tax professionals highlight three qualification criteria for IRS tax relief programs: Tax relief services exist for many financial situations, and your circumstances will determine which option works best. So, consult a professional at a reputable tax relief company . They can assess your situation, help gather required documentation and guide you toward the optimal approach.
CBS News
29-01-2025
- Business
- CBS News
How does the mortgage interest tax deduction work? Experts explain
Tax season is officially here, and millions of Americans are now preparing to file their taxes for the income they earned in 2024. If you own a home, the mortgage interest deduction could reduce your tax liability — which could be especially useful given today's high mortgage interest rates environment. But if you want to take advantage of this opportunity to lower your tax burden, understanding if and how you qualify is key. Recent changes have reshaped how this tax deduction works. So, we asked tax and financial experts to answer common questions about claiming and making the most of it. Here's what they want you to know. Compare your best mortgage loan options online now. How does the mortgage interest tax deduction work? Experts explain "The government is subsidizing the purchase of your home by allowing you to deduct your mortgage interest payments," says Adam Brewer, tax controversy attorney at AB Tax Law. According to Lupe Valdivia, CEO of West Coast Tax Service, you can write off part of your mortgage interest and property taxes. First-time homebuyers can also deduct a portion of closing costs, including pre-paid points and interest paid through escrow. When you file taxes, these itemized deductions are claimed on Schedule A of Form 1040. What is the mortgage interest tax deduction? "The mortgage interest tax deduction is a [tax benefit that] allows you to subtract the interest paid on your home loan from your taxable income," says Jordan Leaman, certified financial planner and branch operations manager at Churchill Mortgage. Lisa Greene-Lewis, certified public accountant and tax expert at TurboTax, notes that under the Tax Cuts and Jobs Act, tax filers can deduct interest based on up to $750,000 in mortgage indebtedness. If you bought or refinanced your home before December 16, 2017, you may be able to deduct interest based on up to $1 million in mortgage indebtedness. Find out more about the mortgage loan options available to you here. Who qualifies for the mortgage interest tax deduction? Qualifying for the mortgage interest tax deduction is straightforward. Unlike some tax benefits, there are no income restrictions, but experts say you'll need to meet these specific conditions to qualify: Have itemized deductions above standard amounts:"You need to itemize deductions on your tax return rather than take the standard deduction," says Leaman. The standard deduction for 2025 is $15,000 for single filers and $30,000 for couples filing jointly. Your combined itemized deductions must exceed these amounts to make the mortgage interest deduction worthwhile. Have a loan secured by your home: The mortgage loan must be legally tied to your property as collateral. This gives your lender the right to claim your property if you default on payments. Live in the mortgaged property: "You [must] live in the home and it has to be a first or second home," says Valdivia. Use the loan for home purposes: Your mortgage must be used to buy, build or improve your home. Who doesn't qualify for the mortgage interest tax deduction? Even if you have a mortgage, certain situations might prevent you from claiming this deduction, including: The standard deduction exceeds the itemized total: If your mortgage interest, along with other itemized deductions, totals less than your standard deduction amount, you'll save more on taxes by skipping this deduction. Your spouse takes a different deduction approach: According to Brewer, married couples filing separately must follow special rules. If one spouse itemizes deductions, the other must also itemize. You can't claim the mortgage interest deduction if your spouse takes the standard deduction. You only own rental property: Rental property owners can't use this deduction. However, Valdivia says you can still benefit by applying mortgage interest as an expense to offset the rental income generated from that property. Mortgage interest tax deduction pros and cons to know Below, Greene-Lewis, Leaman and Valdivia break down what makes this deduction valuable and where it falls short. To start, this tax deduction offers several key advantages, including: It opens up other deductions: When you itemize mortgage interest, you can also claim other deductions such as property taxes, charitable donations and medical expenses. It reduces taxable income: Lowering your taxable income through this deduction can lead to significant tax savings, especially if you have a larger mortgage. Mortgage points are deductible: You can deduct loan origination points as part of your mortgage interest. This gives you an extra tax benefit in the year you buy or refinance. But it comes with some limitations, like: Refinancing restrictions: If you refinance your mortgage loan, you must spread point deductions across the loan's lifetime rather than claiming them all at once. Benefit limitations:"Higher-income homeowners with bigger mortgages tend to get the biggest benefits," says Leaman. Those with smaller loans might find the standard deduction more valuable. Deduction exclusions: You can't deduct large expenses such as down payments, home insurance or immediate repair costs. The bottom line The mortgage interest tax deduction can be beneficial for many homeowners, but it isn't a one-size-fits-all benefit. "I see so many opportunities missed simply because taxpayers followed advice from a friend and [didn't] claim a deduction they were entitled to," says Valdivia. So, it may benefit you to consult a tax professional who can review your finances. They can determine whether itemizing would save you more than the standard deduction and identify other tax advantages you might be missing. Your unique situation — including your loan amount, interest rate and other potential deductions — will determine whether this tax break makes sense.
Yahoo
29-01-2025
- Business
- Yahoo
Tax changes driving retirees to 'low-tax states.' What this means
When retirees opt to downsize, taxes are a critical consideration, especially if relocating to a new state. Adam Brewer, a tax attorney at AB Tax Law, joins Wealth host Brad Smith to explain the complexities retirees face when weighing how to when to downsize or whether it's worth to buy a new home or just rent. "If you're a retiree looking to downsize, don't take the tax side of things lightly. It's a complex mix because we're talking about income tax, we're talking about retirement, we're talking about property tax and we're also looking at inheritance tax," Brewer says. Brewer points out that the Tax Cuts and Jobs Act has accelerated the shift from high-tax states like New York to lower-tax states like Florida. This is mainly due to the law's limit on state and local tax deductions to $10,000. Additionally, Brewer touches on the potential pitfalls of selling a home to family members, warning, "If you sell it to your kids, you have to be careful about what is the fair market value of the home if you sell it. If you gift it... the lifetime gift exemption is so high... most taxpayers aren't going to run into that. But what their heirs may run into is if they ever decide to sell the property, now they could possibly get hit with a massive capital gains [tax]." To watch more expert insights and analysis on the latest market action, check out more Wealth here. This post was written by Josh Lynch
