TMTW #435 – Happy Memorial Day!

Tax and Money Tip of the Week:
Happy Memorial Day!
May 22, 2019 | No. 435


We would like to take the time to wish everyone a safe and happy Memorial Day!

Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week

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TMTW #434 – Don’t Claim Social Security at 62. Unless…

Tax and Money Tip of the Week:
Don’t Claim Social Security at 62. Unless…
May 15, 2019 | No. 434

Click Here to read about claiming Social Security from an article in The Wall Street Journal’.

Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next time

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TMTW # 433 – Get ready to launch a solo 401K retirement plan

Tax and Money Tip of the Week:
Get ready to launch a solo 401K retirement plan
May 8, 2019 | No. 433


Click Here to read an article about solo 401K plans.

Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week

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TMTW #432 – Tax Reform Attacks Home Mortgage Interest Deductions

Tax and Money Tip of the Week:
Tax Reform Attacks Home Mortgage Interest Deductions
May 1, 2019 | No. 432

Tax Reform Attacks Home Mortgage Interest Deductions

The recent tax reform contains two big changes to how much you can deduct in mortgage interest for tax years 2018 through 2025:

  1. During this seven-year period, you may not deduct any interest on prior or current home equity debt, with certain exceptions.

 

  1. Also during this seven-year period, the maximum amount you may treat as acquisition debt for new homes purchased after December 15, 2017, is $750,000.

Exception alert. Your home equity loan may include acquisition or home-improvement debt, and that debt continues as deductible under the recent tax reform rules.

Example. Billy took out a $90,000 home equity loan in 2015. He used $50,000 to remodel portions of his home and used the remaining $40,000 for his daughter’s college tuition. Billy’s total home mortgages never exceeded $1.1 million. Under the new law, Billy may deduct five-ninths of his home equity loan interest in 2018.

Acquisition debt. When you buy your main home or a second home and take out mortgages secured by those homes, your mortgages are called acquisition debt. You can add acquisition debt when you improve your main or second home, and that new debt is secured by the home you improved.

Refinancing alert. Your acquisition debt does not increase when you refinance unless you use the new monies to improve the home.

Example. Tom bought a home in 2010 and took out a $500,000 mortgage that he secured with the home. In 2018, Tom has paid down his mortgage to $430,000, and his home has increased in value to $800,000. Tom refinances the home and takes out a new mortgage in the amount of $600,000, secured by the home.

If Tom uses none of the new money to improve his home, his mortgage interest deduction in 2018 is based on the $430,000 of mortgage principal that remained as of the date of his refinancing. To put this in perspective, your original acquisition debt never increases on that original home. To increase your debt eligible for the home mortgage interest deduction, you need to use the new debt to improve the home.

Ceilings. Because of tax reform, you now have two possible 2018 ceilings on your home mortgages that are eligible for the mortgage interest deductions.

$1.1 million. For indebtedness incurred before December 15, 2017, you may not deduct interest on more than $1.1 million in mortgages ($1 million in acquisition debt and $100,000 in home equity debt used for acquisition or improvements). The original $1.1 million ceiling is grandfathered for acquisition and improvement loans in existence before December 15, 2017.

Example. Sam took out his mortgages during 2013. Sam faces the $1.1 million ceiling in 2018.

$750,000. For home mortgage indebtedness incurred on or after December 15, 2017, you may deduct interest on no more than $750,000 of home mortgages.

Example. Jim took out his mortgage in 2018. He faces the $750,000 ceiling.

Exception. If you entered into a written, binding contract before December 15, 2017, to close on the purchase of a principal residence before January 1, 2018, and you complete the purchase before April 1, 2018, you fall into the $1.1 million ceiling category.

Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week

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TMTW #431 – NC REAL ID – Due October 1, 2020

Tax and Money Tip of the Week:
NC REAL ID – Due October 1, 2020
April 24, 2019 | No. 431

Click here to read an article in ‘The News and Observer’ regarding the REAL ID program.

Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week

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TMTW #430 – Thank You Clients! Another Successful Tax Season!

Tax and Money Tip of the Week:
Thank You Clients!
Another Successful Tax Season!

April 17, 2019 | No. 430

Aaah…..the week after tax season is the best week in a CPA’s life each year!

We met a lot of new clients this year because of referrals from existing clients, and readers of our Tax and Money Tip of the Week. Thank you!

Our firm continues solid growth thanks to all of you.
A referral is the best compliment we can ever receive.

Even though our tax season is over, we will continue our Tax and Money Tip of the Week for the rest of the year. We will keep you updated on the constant tax law changes as well as spotlighting specific tax and money making ideas.

Again, thank you for making this one of the most successful tax seasons yet.

Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week

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TMTW #429 – It is “OK” to File an Extension

Tax and Money Tip this Week:
It is “OK” to File an Extension
April 10, 2019 | No. 429

Please take notice of our office closing date. Our office
will be closing at 6:00pm on Friday, April 12th and
will not reopen until Wednesday, April 17th, 2019.

If you haven’t filed your tax return by now, you should probably consider filing for an extension.

To file for an extension, you simply need to submit Form 4868.  Submitting this form will give you until October 15th of that year to file your returns. However, an extension of the time to file is not an extension of the time to pay.  If you think you will owe taxes, you must send a payment along with the extension.  This applies for your federal
and state tax returns.

Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site.
We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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