I am not gifted in personal income taxes. I can muddle my way through Turbo Tax, but that’s about it. I’ve always wondered if I’m leaving money on the table by not claiming a deduction, or worse, a refundable credit!
I think I speak for us all with this request; Can you provide some AF Best Practices when it comes to handling your personal income taxes? For instance, where can one claim examination fees? That question comes up every tax season from green L1ers.
I realize the vaguity of my request, but just a simple tutorial that even a CFA Candidate could follow would be very appreciative. Despite my real estate hate from way back when, I’m now very close to buying a condo to grow some roots, build equity, and hopefully realize some appreciation. However, first and foremost, it will simply be the place I live.
I really wish there was a Tax Book for real people that isn’t the IRS publications, FASB codifications, and CPA Quickfinder. Again, thanks in advance for any best practice guidance you can give.
Page 1 of the 1040, line 34. “A taxpayer can deduct costs incurred to maintain or improve skills required in his business or employment, but not costs incurred to meet minimum requirements for a trade or profession or to qualify for a new trade or profession.” I guess that means that if you already work in finance, then you can deduct the exam fees, and the costs for your Schweser materials.
Moreover, if your education is dedcuctible, then the costs of travel to/from that education are also deductible, as long as you work a full-time job, and the school is only temporary. (Temporary = < 1 year.)
To answer your “bigger” question, though. I don’t really know a good layman’s book on the subject. Except for textbooks or reference guides, I think the best source of tax advice would probably be Kiplinger’s or Money magazine. They’re constantly referring to new tax law, and new deductions. They even bring up some of the more obscure stuff, like what appliances qualify for the new energy credits, when the credits phase out, when they expire, etc.
Remember that unless you own your own business, all of your deductions will either be on the bottom half of page 1, or they’ll be on Schedule A of the 1040. Page 1 deductions are usually those that pertain to earning income (education, IRA’s, moving expenses, student loan interest). Schedule A deductions are medical expenses, mortgage interest, state sales/income tax (you can deduct EITHER sales OR income tax, but not both), and charitable contributions.
The best source of information for these is probably the 1040 or Schedule A instructions. I know that’s not what you wanted to hear, but it’s easy to find using Google, and not difficult to read.
And don’t forget the credits on page 2. Unless you’re in school, or are buying new “green” equipment for your house, then the only credits that are available are probably the ones relating to kids (Child Tax Credit and childcare expenses). And there’s Foreign tax credit, if you invest in mutual funds that have foreign holdings. The information for that will be on your 1099.
Don’t do it for the tax deduction. And don’t look at it as an investment. Do it because you want a place to live.
A house is a place to live–not an investment.
IMHO - The first question to ask is, “Do I want to be a homeowner?” Because there are a lot of associated burdens with being a homeowner. You can’t just call the landlord to fix things. You can’t just move out in a few months if you don’t like the neighborhood. If your A/C breaks, it’s incumbent on you to fix it (for $5 to 10k). I’m sure there are more, but I just can’t think of them.
^ Yup yup, I get all that. This is a place to life, that’s it. No plans for roommates, but that may change. I don’t really want to play landlord. I plan to live in this area for at least 5-7 years if not longer. After bouncing around the country growing up, I feel NYC is not only home, but the greatest city in the world (Yes, I have been to Hong Kong and Tokyo).
I feel earning some equity and possible appreciation would be better than remaining at the mercy of my current slumlord. Being this is the biggest purchase of my life thus far, I don’t want to leave money on the table in regards to tax deductions, credits, loopholes and so forth.
^Cool! Now I know I have a place to stay when I visit NYC again. (Whenever that is…)
Out of curiosity–what part of town do you live in? I really liked the Bensonhurst area, and thought the area in downtown Brooklyn was pretty cool, too.
^ No homo, but yes, feel free to crash in my pad whenever.
I live in Harlem now. But I am looking at properties elsewhere around the city. Aside from Midtown, Tribeca, UES, FiDi, I’ve really taken a liking to Queens. Brooklyn is nice likewise. So we’ll see what happens. I’m in the early stages of searching, but I feel confident in my decision after performing my due dilly.
A pudgy white boy with a Texas drawl probably wouldn’t last too long. I’d be inclined to walk up to a group of bruthas and ask, “Hey! How all yawl doin’ today?” Probably not very good for your health, hmmm?
EDIT - this was supposed to be funny. My buddy never took me to Harlem, so I don’t really know what it’s like. I imagined Queens was going to look like the movie “Coming to America”, and I was surprised by how nice it really was. Harlem/Bronx might be the same way.
I just bought a home in NJ and can’t wait for it to double in like 5 years and I am already licking my chops while waiting for those healthy tax deductions!! woot woot
But seriously, I was looking forward to the mortgage interest and property tax deductions. Finally I can fill out a schedule A and do some funny business
I got caught taking illegal IRA deductions. Sumabitches figured it out, but thank god the penalties weren’t too crazy.
Finished reading the cheating culture the other day and what the author said about the IRS cronies is true. They go after the little guys because they know we will sh*t in our pants when we see that letter and just pay up instead of fighting back…
Pudgy, white, southern boys are loved in Harlem. Bill Clinton’s personal office is there. If I’m not mistaken, he’s just a couple of buildings from the Corner of MLK Blvd and Malcom X Blvd. I hear he likes to cool off in the pool at Garvey Park.
Good book. The other thing is, people will often pay up since the IRS found just 1 cockroach. Most of the time, if they dug more during an appeal, they would find much more to tack on to the first charge. People who cheat realize this and just pay up so storm audit stops. Can I ask what happened ZB? What was said grey area and what were the penalities?