Tax time is here. If you know of any special tips for saving money on paying taxes please note it down here. Many of us may know some quirks which others may not know about and hence they may fail to take advantage of the same and end up paying more than required to Uncle Sam.
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Through a thread in indians list at yahoo, I found out that mortgage paid on a property in India can also qualify for mortgage deductions while paying taxes here in US.
They listed the following websites for reference
http://home-equity.interest.com/content/articles/home-equity_story.asp?story_id=1000035135&ID=interest
http://www.nytimes.com/2007/06/10/realestate/greathomes/06gh-home.html?ex=1339128000&en=286064dfaea4abfd&ei=5088&partner=rssnyt&emc=rss
http://answers.yahoo.com/question/index?qid=20080116232352AAc6xIP
Me is sceptical about this since there is no way for the IRS to know how much mortgage you paid (which can be easily manipulated if you do not get 1099). You may be able to deduct it If you take a loan from a US bank and get a 1099 for that. My 2 paisa
Has anyone tried Itemized Filing. One of my office mate told me that i could get more returns/or pay less on doing so.
I need to do more research and try doing itemized while filing the return.
Any tips on that????
IRS publication 936 is the good reference for Mtg Int.
http://www.irs.gov/publications/p936/ar02.html#d0e537
Following definition from the pub. does not say that the interest has to be paid to the US lender only.
“Part I. Home Mortgage Interest
This part explains what you can deduct as home mortgage interest. It includes discussions on points, mortgage insurance premiums, and how to report deductible interest on your tax return.
Generally, home mortgage interest is any interest you pay on a loan secured by your home (main home or a second home). The loan may be a mortgage to buy your home, a second mortgage, a line of credit, or a home equity loan.
You can deduct home mortgage interest only if you meet all the following conditions.
You must file Form 1040 and itemize deductions on Schedule A (Form 1040).
You must be legally liable for the loan. You cannot deduct payments you make for someone else if you are not legally liable to make them. Both you and the lender must intend that the loan be repaid. In addition, there must be a true debtor-creditor relationship between you and the lender.
The mortgage must be a secured debt on a qualified home in which you have an ownership interest. “Secured debt†and “qualified home†are explained later.”
Itemized filing is beneficial only if total of your itemized deductions on Sch A is more than the standard deduction for your filing status.
There are certain items that can be deducted on this schedule. Nitul – I think in your case if you are using a tax software and going thru each section in the order they come up, then the software should be pretty accurate in deciding standard vs. itemized deduction.
Here is the IRS link to insrtuctions for Sch A.
http://www.irs.gov/pub/irs-pdf/i1040sa.pdf
A reminder to the new parents that daycare expenses can be deducted upto a certain amount. So if you are sending your kid to a “licensed” daycare you can claim the deduction.
Note that your nanny (whom u pay by cash) or a home based daycare which is not licensed is not eligible for a deduction.
The max CAp deductible is $5000.
I think the max cap is 3000 per kid. So if you have 2 kids you can claim 6000. This is only for deducting on your tax return.
But if you use your Dependent Care Spending account from work you can only deduct 5000.