There are many tax benefits built into home ownership. Here is a review of the most common. It may be worth a quick check to ensure you are maximizing your home ownership tax benefits.
Interest deductibility. Mortgage interest is one of the few allowed deductible interest expenses. It is limited to the first $1 million dollars in loans secured by your primary residence. Bonus: You can also deduct interest on a second home (cabin).
Money you place in traditional savings accounts is already taxed by both the Federal and State governments. These after-tax deposits lower the amount you have available for savings. Lower deposit amounts also mean lower earnings potential. Then Interest earned on your savings is also taxed. What can you do to lessen this tax burden?
1. Leverage tax-advantaged retirement accounts. Use 401(k), 401(b) and similar programs to deposit pre-tax money into retirement accounts. This way your initial deposits are larger because they have not yet been subject to income tax. This will provide higher earnings on your savings because of the pre-tax contributions. The downside? Your benefits and contributions will be taxed when you withdraw the funds.
How much money did you save last year? If you didn't save at least 10% of your earnings, you didn't save enough. If your savings in 2013 fell short, the only solution is to take charge of your financial future right now and start saving more money.
Saving money doesn't have to be hard work. In fact, many successful savers have found simple ways to cut spending and increase their savings. Here are some tips to help you get started and stay on track.
College Tax Savings: 2014 Edition Every little break helps
With the start of school just around the corner, it is hard to ignore the high cost of funding a college education. Thankfully, there is some help within the tax code. Outlined here are three of the more popular ways to reduce your taxes in 2014 as a result of this educational expense burden.
Typically you, your spouse, or a dependent who can be claimed as an exemption on your individual tax return
Tuition and fees, course-related books, supplies and equipment
Now that home values are on the rise once more, it makes sense to review the tax benefits of home ownership. Also included this month are simple ideas to save money, a summary of an IRS announcement regarding direct deposit of refunds, and an overview of an interesting 3D printing phenomenon that may impact all of us in the next few years.
As always, should you know of someone who may benefit from this information please feel free to forward this newsletter to them.
Hiring family in the family business can cut taxes
As the summertime school vacation season approaches, young family members may be looking for a job - and having a hard time finding one. Hire them in your family business, and you get a double benefit: helping the kids gain valuable experience and garnering tax breaks for your company.
We all need an emergency fund, but what's considered "an emergency?" Any unexpected hit to your finances, including layoffs, unanticipated illnesses, and natural disasters. Car insurance premiums and regular home maintenance are (or should be) anticipated, so they're not emergencies. The same is true of credit card bills for vacations and visits to the dentist's office. An emergency fund is designed to keep your life intact during temporary setbacks and to help you avoid unnecessary debt.
Everyone wants to save taxes. Well here is a solution to defer taxes, which in the long run may save you taxes - feel free to contact us to learn more about the basic strategy of retirement planning.
Strategy: Set up a solo 401(k) plan. Due to special tax rules, you can contribute more to this type of plan than other comparable retirement plans. In fact, a solo 401(k) offers an unprecedented tax-saving opportunity for a married couple working together.