General Tax Tips
National 529 College Savings Day – Did You Know?
If you put money in a 529 account for education, withdrawal of earnings are tax-free if used for qualified educational expenses. Qualified educational expenses include tuition, fees, housing, meals and books. Many states offer a full or partial tax deduction for 529 plan contributions. They may also offer incentives and promotions to encourage families to open and contribute to 529 accounts today for National 529 College Savings Day.
The 2017 Tax Cuts and Jobs Act (TCJA) also expanded eligibility for 529 savings plans. Up to $10,000 per year can now be used for Kindergarten through Grade 12 education (public, private, or religious schools). This was previously limited to post-secondary education only.
Charitable Donations of Property – Did You Know?
If you choose to itemize, donating furniture, vehicles, or other property to IRS-approved charitable organizations allows you to improve the lives of others while reducing clutter in your own, all while gaining a valuable tax deduction. In many cases, the allowed deduction is equal to the fair market value of the property you donate. However, for property that appreciates in value, such as artwork or musical instruments, special rules govern the allowable deduction amount.
The size of your deduction may also be affected by your adjusted gross income (AGI) and whether you made monetary charitable donations during the same tax year. Deductions of $250 or more require a written acknowledgement from the receiving organization, and those of over $500 require additional documentation. Any deduction for a donation of property valued at over $5,000 requires a certified appraisal.
Home Equity Loan Interest Deduction – Did You Know?
The Tax Cuts and Jobs Act (TCJA) of 2017 eliminated the deduction for interest on most home equity loans. However, you may still be able to deduct some or all of the interest you paid on a home equity loan if you used loan funds to build, expand, or substantially improve your home.
Examples of potentially qualifying projects include building a carriage house or three-season porch, expanding your garage, or replacing your roof.
Education Benefits – Did You Know?
The 2017 Tax Cuts and Jobs Act has expanded eligibility for Section 529 savings plans. Up to $10,000 per year can now be used for Kindergarten through Grade 12 education (public, private, or religious schools).
This was previously limited to post-secondary education only.
Refund Amounts – Did You Know?
If your refund amount is different than stated on the filed tax return, part or all of your refund may have been used to pay off (offset) past-due federal tax, student loans, state income tax or other past-due debts.
You’ll receive a notice from the IRS if such an offset occurs that will show the original tax refund amount, the offset amount, as well as the name, address and telephone number of the agency receiving the payment.
If you have not received your refund yet, you may check the status using the tool at: https://www.irs.gov/refunds. The ‘Where’s my Refund’ tool is updated once daily, usually overnight. Your status is generally available within 24 hours upon the IRS receiving your e-filed return and 4 weeks after mailing your paper return.
Federal Tax Extensions – Did You Know?
If you file for an extension on your federal income tax return, you have until Oct 15th, 2019 file your taxes, but you still have to pay any taxes due by April 15th, 2019 to avoid penalty and interest charges.
Tax Related ID Theft – Did You Know?
Tax related ID theft is when someone uses your information (name, SSN, etc.) to file a false tax return and claim a fraudulent refund. The number one thing you can do to prevent this type of ID theft is to file early and file electronically. The IRS is “first-come, first-served”, meaning whomever files first, electronically, will be the only electronic return accepted. All others for that SSN will be blocked and have to file manually. This can lead to big delays for your refund. Filing season began January 28 this year.
Second Home, Cabin, and Vacation Property Owners – Did You Know?
If you own a second home or vacation property that you live in only occasionally and rent out at other times, you might be able to deduct expenses you pay to maintain the property from your rental income. In addition, you might be able to classify the home as investment property instead of personal property, which offers multiple tax and estate-planning benefits.
In order to fully qualify to deduct expenses and/or designate the home or cabin as investment property, you must meet one of the following two requirements:
1. You use the property as a dwelling for no more than 14 days per year AND rent it out for at least 15 days per year.
2. You use the property as a dwelling for more than 14 days per year but not more than 10% of the number of days you rent it out. For example, if you rent out the home for 200 days a year, you may use it as a dwelling for up to 20 days.
Please note that under IRS rules, “using as a dwelling” includes not only using the home yourself, but also offering use of the home to friends, family, anyone with a financial interest in the property, or anyone who pays less than a fair rental price.
Tax Credits vs. Deductions – Did You Know?
Tax credits directly reduce the amount of tax you owe, reducing the dollar amount of your tax liability. If you receive a tax credit of $500, that lowers your taxes owed by $500. Tax credits can also be refundable such as the EITC and CTC where, if the credit is more than what you owe, you may receive a refund check.
Tax deductions reduce how much of your income is subject to taxes. If you made $60,000 in a tax year and got a $500 tax deduction, your tax bill would be calculated based on an income of $59,500.
Refund Amounts – Did You Know?
If your refund amount is different than stated on the filed tax return, part or all of your refund may have been used to pay off (offset) past-due federal tax, student loans, state income tax or other past-due debts.
You’ll receive a notice from the IRS if such an offset occurs that will show the original tax refund amount, the offset amount, as well as the name, address and telephone number of the agency receiving the payment.
If you have not received your refund yet, you may check the status using the tool at: https://www.irs.gov/refunds.