Saturday, November 01, 2014 02:57am
North Adams, MA now: 45 °   
Send news, tips, press releases and questions to info@iBerkshires.com
The Berkshires online guide to events, news and Berkshire County community information.
SIGN IN | REGISTER NOW   

Home About Archives RSS Feed
The Independent Investor: It's That Time Of The Year — Again
By: Bill Schmick On: 10:29AM / Monday April 11, 2011
Important
0
Interesting
0
Funny
0
Awesome
0
Infuriating
0
Ridiculous
0

We all waited with bated breath until the end of last year, only to see Congress extend the Bush tax cuts for another two years. Although the legislation passed, it did create some issues that you should be aware of in filing your taxes this year.

Let's start with property taxes; something most of us have learned to despise. Until last year, if you owned a home you were able to deduct a portion of your state property taxes in the form of an enhancement or an addition to your standard deduction. The deduction was worth between $500 and $1,000 depending on whether you were married or single. This provision was not extended, but you can still claim the deduction providing you itemize your deductions. The problem with this new wrinkle is that many Americans do not have a sufficient amount of deductions to make itemizing worth doing.

Given the vast number of workers who lost their job during this last recession, if you were unemployed in 2009, the government granted an exemption in unemployment income up to $2,400 per person. That meant you only had to pay taxes on earned income above that amount. That exclusion has been eliminated as well.

So if you were unemployed at any time last year and collected unemployment compensation you owe taxes on 100 percent of that income. The problem here is that few of these jobless taxpayers withhold taxes from this income, so now they will need to come up with the cash they owe the IRS.

The first-time home buyer credit and the follow-on home buyer tax credit on primary residences provided a tax credit ($8,000 for first-time buyers and $6,000 for other buyers) but require that you keep your new residence for at least 36 months. That means if you bought and sold that new home you must repay that tax credit to the government this year.

The American Opportunity tax credit was a bit of new legislation that replaced the Hope credit that allows taxpayers earning $80,000 ($160,000) for joint filers) to claim $2,500 tax credit for tuition, fees, books, supplies and equipment required for educational studies paid in 2010. There is some confusion about this tax credit because the government already allows a deduction of up to $4,000 for the same items. You can't claim both the deduction and the credit.

People become confused between a credit and a deduction. Simply put, a deduction reduces your income while a tax credit reduces your tax bill. If you earned $60,000, for example, and took the $4,000 education deduction that would reduce your adjusted gross income to $56,000. If you were in the 20 percent tax bracket, then the tax savings for you would be ($4,000 X 20 percent) or $800. However if you selected the tax credit, your tax bill would be reduced by $2,500, a dollar-for-dollar tax savings.

Because Congress acted so late in the year, the IRS said it would need until mid-February to reprogram its systems. As a result, they advised that those who plan to itemize their deductions wait until after March 1 to file their taxes. Since most of us wait until the very last second (or longer) to file, this delay should not have a major impact on us taxpayers. In any case, the coast is clear for filing your taxes. I bet you just can't wait.

Note: You've got some extra time. Tax day is Tuesday, April 19, this year because the 15th falls on a Friday holiday in Washington and Monday falls on Patriots Day in Massachusetts.

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at (toll free) or e-mail him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.



Tags: taxes, IRS, deductions      
News Headlines
The Meat Market Offers Offal Dinner for All Hallow's Eve
'St. Vincent': Absolved of All its Sins
These Mysterious Hills: Pittsfield's Downtown Awash in Ghostly Legends
Pittsfield Debates Control Over School Department Budget
Lenox Calling Special Town Meeting
Community Bids Farewell to MCLA's Grant & Canavan
Adams COA Loads Up 'Buckets of Sand' for Local Senior Citizens
BRPC Concludes Train Station Study, Encourages Towns To Stay Involved
2014 Bazaars & Craft Fairs
Berkshire County Arc Launches 2014 Annual Campaign

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (150)
Independent Investor (202)
Archives:
October 2014 (9)
September 2014 (5)
August 2014 (7)
July 2014 (2)
June 2014 (6)
May 2014 (9)
April 2014 (8)
March 2014 (6)
February 2014 (6)
January 2014 (8)
December 2013 (8)
November 2013 (7)
Tags:
Selloff Europe Recession Oil Currency Stimulus Taxes Interest Rates Federal Reserve Fiscal Cliff Election Fed Deficit Congress Energy Commodities Euro Greece Debt Ceiling Pullback Stocks Debt Japan Rally Markets Retirement Economy Jobs Bailout Stock Market Metals Housing Europe Banks Crisis
Popular Entries:
The Independent Investor: Understanding the Foreclosure Scandal
The Independent Investor: Don't Fight the Fed
The Independent Investor: Does Cash Mean Currencies?
@theMarket: QE II Supports the Markets
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: How Will Wall Street II Play on Main Street?
The Independent Investor: Will the Municipal Bond Massacre Continue?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
Recent Entries:
The Independent Investor: Workers Get to Save More in 2015
@theMarket: All Clear
The Independent Investor: The Elephant in the Room
@theMarket: So far, So Good
The Independent Investor: OPEC's Oil Ploy
@theMarket: Are We There Yet?
The Independent Investor: Why Is This Recovery Different?
@theMarket: October Starts Off on High Note
The Independent Investor: Money & Divorce — What You Should Know
@theMarket: Wash, Rinse and Repeat


View All
Soccer: McCann Tech vs...
McCann Tech senior Austin Worth scores the game-winner in a...
Grant & Canavan Farewell...
MCLA President Mary Grant and her husband, James Canavan,...
Girls Soccer: Franklin Tech...
McCann Tech girls celebrate 3-0 semi-finals win advance to...
Girls Soccer: Pittsfield vs...
The Pittsfield and Wahconah girls soccer teams on Tuesday...
Soccer: Putnam vs McCann Tech
The McCann Tech boys soccer team closed out the home...
Soccer: Hoosac Valley vs...
MCLA Boo Bash 2014
The annual MCLA Boo Bash hosted by Berkshire Towers...
Girls Soccer: Commerce vs...
McCann girls soccer team Senior Day game on Monday...
Adams Lions Club Halloween...
Children followed the Hoosac Valley Marching Band down Park...
Girls Soccer : Mount Greylock...
Flynn scored her second goal of the game to stop a Hoosac...
Football: Mount Greylock vs...
The undefeated Wahconah High School football team shutout...
Football: Lee vs Monument
Saturday afternoon football Lee wins over Monument Mountain...
The Massachusetts Junior...
The Massachusetts Junior Classics League held its fall...
Football: Hoosac Valley vs...
Hoosac Valley overpowers Drury 63-12, Saturday afternoon.
Pittsfield Halloween Parade...
Monsters and zombies, princesses and Jedi ushered in the...
Soccer: Wahconah vs Lenox
Collin Parrott scored three times on Tuesday to lead the...
Soccer: McCann Tech vs...
McCann Tech senior Austin Worth scores the game-winner in a...
Grant & Canavan Farewell...
MCLA President Mary Grant and her husband, James Canavan,...
Girls Soccer: Franklin Tech...
McCann Tech girls celebrate 3-0 semi-finals win advance to...
Girls Soccer: Pittsfield vs...
The Pittsfield and Wahconah girls soccer teams on Tuesday...
Soccer: Putnam vs McCann Tech
The McCann Tech boys soccer team closed out the home...
| Home | A & E | Business | Community News | Dining | Real Estate | Schools | Sports & Outdoors | Berkshires Weather | Weddings
Advertise | Recommend This Page | Help Contact Us | Privacy Policy| User Agreement
iBerkshires.com is owned and operated by: Boxcar Media 102 Main Street, North Adams, MA 01247 -- T. 413-663-3384 F.413-664-4251
© 2000 Boxcar Media LLC - All rights reserved