Wednesday, May 27, 2015 07:42am
North Adams, MA now: 70 °   
Send news, tips, press releases and questions to info@iBerkshires.com
The Berkshires online guide to events, news and Berkshire County community information.
LOG 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
Selectmen Approve Phase 1 Of Bridge Repair, Town Warrant
Pittsfield Paid $80K In Moving Costs to 100 North St.
North Adams Financial Review Finds Few Issues
Pittsfield Licensing Board OKs New Classic Car Business
Northern Berkshire Relay for Life Set Friday Night
Humane Society Hosts Talk on Animal Hoarding
Cariddi Fields Questions About The State Budget
Mount Greylock District Whittling Down School Options
Berkshire County Remembers the Fallen on Memorial Day
Adams Free Library Rededicated

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 (169)
Independent Investor (229)
Archives:
May 2015 (5)
May 2014 (1)
April 2015 (8)
March 2015 (6)
February 2015 (7)
January 2015 (9)
December 2014 (7)
November 2014 (4)
October 2014 (9)
September 2014 (5)
August 2014 (7)
July 2014 (2)
June 2014 (6)
Tags:
Deficit Fiscal Cliff Congress Energy Taxes Currency Federal Reserve Metals Japan Fed Crisis Housing Election Euro Europe Rally Banks Commodities Oil Bailout Debt Stimulus Markets Pullback Recession Jobs Stocks Economy Stock Market Debt Ceiling Greece Interest Rates Europe Retirement Selloff
Popular Entries:
The Independent Investor: Don't Fight the Fed
The Independent Investor: Understanding the Foreclosure Scandal
@theMarket: QE II Supports the Markets
The Independent Investor: Does Cash Mean Currencies?
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: Will the Municipal Bond Massacre Continue?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: How Will Wall Street II Play on Main Street?
The Independent Investor: Why Are Interest Rates Rising?
Recent Entries:
@theMarket: June Is Off the Table
The Independent Investor: Will Memorial Day Kick Off a Strong Summer?
@theMarket: Another Record High
The Independent Investor: Millennials & Money
The Independent Investor: Avian Flu Scrambles the Egg Business
The Independent Investor: Does Another Trade Pact Make Sense?
@theMarket: Buy on the News
The Independent Investor: Should You Manage That 401(k)?
@theMarket: Right Back Into the Range
The Independent Investor: Brazil Not For the Faint of Heart


Third Thursday May 2015
Pittsfield's monthly summer street festival, 3rd Thursday,...
Girls Inc. Awards 2015
Girls Inc. honored scholarship recipients at the annual...
Williamstown Memorial Day...
Williamstown marked Memorial Day with a parade on Main...
Cheshire Memorial Day 2015
Cheshire residents, veterans, and special guests follow the...
Adams Memorial Day 2015
Adams observed Memorial Day with a parade and a ceremony at...
North Adams Memorial Day 2015
Residents, veterans, and guests met at the Veterans...
Clarksburg Memorial Day 2015
Clarksburg held Memorial Day observances at Town Hall with...
Pittsfield Memorial Day 2015
Pittsfield celebrated Memorial Day on Monday with a parade...
Wahconah High Prom 2015
Wahconah Regional High School held its 2015 Prom at the...
Lacrosse: Wahconah at Taconic
Wahconah won over Taconic 13-3 Friday afternoon.
Lanesborough Memorial Day...
Lanesborough celebrated Memorial Day Sunday with a parade...
Lee High Prom 2015
Lee High School held its senior prom at Cranwell Resort in...
Sullivan School Memorial Day...
Students, faculty, veterans, and distinguished guests...
Lacrosse: Pittsfield at...
Brendan Leary led the Pittsfield boys lacrosse team to a...
T&F: Quad Dual Meet
Mount Greylock's track and field team hosted three other...
Baseball: Wahconah at...
"It was really cold out today, and I had to heat up my...
Third Thursday May 2015
Pittsfield's monthly summer street festival, 3rd Thursday,...
Girls Inc. Awards 2015
Girls Inc. honored scholarship recipients at the annual...
Williamstown Memorial Day...
Williamstown marked Memorial Day with a parade on Main...
Cheshire Memorial Day 2015
Cheshire residents, veterans, and special guests follow the...
Adams Memorial Day 2015
Adams observed Memorial Day with a parade and a ceremony at...
| Home | A & E | Business | Community News | Dining | Real Estate | Schools | Sports & Outdoors | Berkshires Weather | Weddings |
Advertise | Recommend This Page | Help Contact Us
iBerkshires.com is owned and operated by: Boxcar Media 102 Main Street, North Adams, MA 01247 -- T. 413-663-3384 F.413-664-4251
© 2012 Boxcar Media LLC - All rights reserved

Privacy Policy| User Agreement