From the Patrick Parker Realty Tax Season Blog Series
Tax Guidance for Business Owners and Home Ownership and Investing
- Shift income to your child’s lower tax bracket by paying your children reasonable wages to help you with age-appropriate jobs in your business. A child may be able to earn up to $6,200 in 2014 without paying federal income taxes.
- Deduct the health insurance premiums you pay for your entire family. If you employ your spouse in your business, you may deduct the premium as an employee benefit.
- Deduct an office in your home, if you regularly and exclusively use part of your home to perform administrative or managerial activities for your business. You may be able to deduct a portion of utilities, rent or mortgage interest, depreciation, cleaning, and the like.
- Read more. Subscriptions, books, and other materials related to your field are tax-deductible items. Ditto conferences, seminars, and courses related to your work.
Home Ownership and Investing
- Own your own home. Mortgage interest and property tax deductions will save you money on your taxes, and saving to buy a home is a wonderful use for your money after you have contributed the maximum to tax-advantaged retirement plans.
- Deduct points paid on your home loan. Points paid when you acquire your home are deductible in that year, and points paid to refinance a loan must be written off over the length of the loan (1/30 each year on a 30 year loan). When you refinance again, you can write off the remaining unamortized points. When you sit down to do your taxes make sure you have records of points paid.
- Contribute to your IRA early in the year so your money has longer to grow. Although you have until April 15 of the following year to contribute, your money will have 15-1/2 more months to grow if you contribute on January 1 of the previous year.
- Deduct personal bad debts. If your best friend borrows money and then skips town, you may be able to deduct this non-business bad debt as a short-term capital loss on your tax return up to $3,000.
Keep in mind that this is general information designed to help you put these valuable deductions on your radar. Patrick Parker Realty Agents and Realtors are not certified accountants. Please be sure to check with your tax adviser to see if you qualify for a particular credit or deduction.
Check back in with the Patrick Parker Realty Blog each Tuesday, Thursday and Saturday for more Tax Season Blog Series’ Posts and sign up for the monthly Patrick Parker Realty eNewsletter to have updates delivered to your inbox.
The Blog Series will cover many topics such as How do I qualify for a home seller break?, How do I qualify for a home buyer break?, Do I have to report the home sale on my return?, What is the gain on the sale of my home?, What Are Home Renovation Tax Credits?, Deducting Mortgage Interest, Taking the First-Time Homebuyer Credit, How to Avoid Taxes on Canceled Mortgage Debt, Tax Incentives as they relate to Life’s biggest transitions, such as Marriage, the Birth of a Baby, Divorce, or the death of a Spouse and much more. New posts in this Blog Series will be published twice weekly.
For more information about paying taxes on the sale or purchase of your home or any other questions you have about this article please speak with your tax professional or visit www.irs.gov.