Refinancing points

When you file your online tax return this time make sure to look at the possible deductions that you can avail to save your money.

Even if you just file your 1040ez online you cannot miss these deductions. Everybody likes to save money and you are probably no different. What you can miss as a deduction is the deduction that you get on the refinancing of your house loan. This is often missed by a lot of people as it is not that well known. It can save you quite a few of your hard earned money.

When you buy a house, you get to deduct in one fell swoop the points paid to get your mortgage. When you refinance a mortgage, though, you have to deduct the points over the life of the loan. That means you can deduct 1/30th of the points each year if it’s a 30-year mortgage. That’s $33 a year for each $1,000 in points you paid — not much, maybe, but don’t throw it away.

Even more important, in the year you pay off the loan — because you sell the house or refinance again — you get to deduct all points that have not yet been deducted. There’s one exception to this sweet rule: If you refinance a refinanced loan with the same lender, you add the points paid on the latest deal to the leftovers from the previous refinancing, then deduct the amount gradually over the life of the new loan.

Inherited IRA assets

Well if you are filing your tax online and even if it is the simplest of 1040ez online you probably want to save some tax by getting those deductions that you do not get.

But then you will have to file another form because you efile 1040ez when you are availing only the standard deduction. Anyways, just to inform you, you can save tax if you inherit certain kind of property from someone.

This break can save you a lot of money if you inherited an individual retirement account from someone whose estate was big enough to be subject to the federal estate tax.

Basically, you get an income tax deduction for the amount of estate tax paid on the IRA assets you received. Let’s say you inherited a $100,000 IRA, and the fact that the money was included in your benefactor’s estate added $45,000 to the estate tax bill. You get to deduct that $45,000 on your tax return as you withdraw the money from the IRA. If you withdraw $50,000 in one year, for example, you get to claim a $22,500 itemized deduction on Schedule A. That would save you $6,300 in the 28% bracket. So if you get the mail in your mailbox about your inheritance of a large estate, do not be worried that it will all be gone into tax and all, but make sure to file your deductions and avail them. This is one of those deductions that people are not generally aware of and tend to miss.

Well if you are filing your tax online and even if it is the simplest of 1040ez online you probably want to save some tax by getting those deductions that you do not get.

But then you will have to file another form because you efile 1040ez when you are availing only the standard deduction. Anyways, just to inform you, you can save tax if you inherit certain kind of property from someone.

This break can save you a lot of money if you inherited an individual retirement account from someone whose estate was big enough to be subject to the federal estate tax.

You might need to itemize even if your deductions are less than the standard deduction

Well you probably are aware of the benefits of itemizing and use it on a regular basis every year before you file your online tax return. But most of us think that we are required to itemize only if our deductions are more than the standard deduction. Even though this is mostly true in most of the cases, there might be certain instances when you are required to itemize even when your deductions are less than the standard deduction. And this is not for your convenience but it is required by law by the Internnal revenue Service. Some taxpayers must itemize, even if their deductions are less than the standard deduction. You must itemize your deductions if:

  • You are married, filing separately, and your spouse itemizes.
  • You are a U.S. citizen who can exclude income from U.S. possessions.
  • You are a nonresident or dual-status alien.
  • You file a short-period return because of a change in your accounting period.

So if you come under any of these cases then you are required to itemize before you efile 1040, even if you are having deductions that are less than the standard deduction. Itemizing is good for you even if you do not require it as it can give you a better idea and control over your taxes and tax filing. Do keep this in mind and use the benefits of itemizing for peace of mind.