Archives for March 2019

We all know the annual ritual: once January rolls around, you gather your tax documents to file your tax returns by the deadline. Sometimes (or maybe all the time!) you need an extension. And maybe you don’t meet the extended deadline, and now your return is late and unfiled. Then the next tax season rolls around, and you still haven’t filed last year’s return—so you don’t want to do the current one either, out of fear of the IRS or because you need last year’s data. Now your problem is snowballing—and if you let fear grip you, it can continue for years . . . [Read more…] about Unfiled Tax Returns? Back Taxes? IRS Penalties? Do This!

The recent tax reform contains two big changes to how much you can deduct in mortgage interest for tax years 2018 through 2025:

1. During this seven-year period, you may not deduct any interest on prior or current home equity debt, with certain exceptions.
2. Also during this seven-year period, the maximum amount you may treat as acquisition debt for homes purchased after December 15, 2017, is $750,000.

Exception alert. Your home equity loan may include acquisition or home-improvement debt, and that debt continues as deductible under the recent tax reform rules. Example. Billy took out a $90,000 home equity loan in 2015. He used $50,000 to remodel portions of his home and used the remaining $40,000 for his daughter’s college tuition. Billy’s total home mortgages never exceeded $1.1 million. Under the new law, Billy may deduct 5/9 of his home equity loan interest in 2018. [Read more…] about Can You Deduct Mortgage Interest?