- Transform Nondeductible Interest into Tax Deductible Interest
- The only interest that is still deductible as an itemized deduction is home mortgage interest and investment interest. If you are like so many others with large consumer debt, such as credit cards and car payments, you are paying high interest rates that are not deductible. If the amount of consumer interest you pay each year is substantial and you itemize your deductions, you may want to consider converting that nondeductible interest into tax-deductible interest by paying off the consumer debt with a home equity line of credit. Generally, current law allows individual taxpayers to borrow up to $100,000 of home equity and deduct the interest on that loan as home mortgage interest. This would also apply to planned large consumer purchases, such as a car or motor home. Using a home equity line to purchase these items will make the interest deductible.
- The IRS Has Become More Liberal With College Expenses
- Computers and the Internet have become integral parts of education by providing access to online courses, learning and research. It is virtually impossible to be enrolled in postsecondary education without a computer, which is needed to complete written assignments, type reports, prepare theses and access the Internet.
- Expenses From Looking For Work May Be Tax-Deductible
- If you are looking for work, some of the expenses you incur may be tax-deductible, provided that you are looking for work within the same field. Unfortunately, expenses incurred when searching for a job in a new field or a first job are not tax-deductible.
- Are You Ignoring the Household Employee Payroll Rules?
- If you hire a domestic worker to provide services in or around your home, you probably have a tax liability that you don’t know about – or one that you do know about but are ignoring. Either situation can come back to bite you. When the worker is your employee, your liability includes both withholding and paying payroll taxes as well as issuing a W-2 after the close of the year.
- Odds of Being Targeted by the IRS for Audit
- If you, like others, dread the thought of being audited by the IRS, then you should know that the IRS, like any good business, concentrates its efforts where they produce the best results (revenue)! Thus, its audit selection process favors returns that claim the earned income tax credit (EITC), for which a lot of fraud is prevalent, as well as business returns and returns for higher income taxpayers.
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