Beginning January 1, 2011, the income tax preparation industry is being regulated. What will this really mean for the average taxpayer? If history is any indicator, regulation always raises prices. All paid preparers will be required to pay an annual license fee and take a given number of continuing education (CE) hours of training each year. The Tally Tax Man is an Enrolled Agent (EA). He is already licensed with the IRS and undergoes several hours of CE each year. He is ready for the new rules to come into effect.
This new set of rules will change the business model for the large tax preparation franchises. With these new rules, they will have to raise their rates to cover these new costs for compliance. The new rules will also put many neighborhood tax preparers out of business. This is a very unfortunate consequence of regulation.
Want to pay off your mortgage in half the time? I offer a Home Equity Acceleration Plan. This plan, if implemented properly, will help you pay off your standard 30-year mortgage in about half the time. This program does require a home equity line of credit (HELOC).
This program lets you use your HELOC as a primary transaction account, and capitalizes on the difference in the way interest is calculated on the HELOC vs. the traditional mortgage. You might be surprised how interest on average daily balance compares to interest paid one month in arrears and daily compounded. Check out my website at www.heaptallahassee.com for details.
There are several exemptions available to help you reduce your property taxes:
The Low income senior exemption has adopted an ordinance providing an additional $25,000 homestead exemption for low-income homeowners (total household income of less than approximately $25,873), who are age 65 and over. The tax savings is approximately $289.
The homestead exemption provides for a $25,000 exemption in assessed value for Florida homeowners. In 2008 the exemption resulted in a savings up to $485 in Leon County. Effective January 1, 2008, there is an additional $25,000 exemption on Non-School taxes for the valuation between $50,000 and $75,000. This is worth up to $290 in Leon County.
The $500 Widow(er)’s Exemption allows for any widow(er) who is a permanent Florida resident to claim this exemption. If the widow(er) remarries, she/he is no longer eligible. If the husband and wife were divorced before his death, the woman is not considered a widow. You may be asked to produce a death certificate when filing for the first time.
I will cover the rest of these in the next 2 blog entries.
The Roth IRA has been around for about 10 years. This was created as an alternative to the Traditional IRA. With a Traditional IRA, your contributions are tax-deductible and are fully taxable when you distribute the income.
The Roth IRA is essentially the opposite. The contributions are not tax-deductible, but the distributions are not taxable. There is an income phase-out range for your contributions for both types of IRA, based on your filing status. The 2009 contribution limits for both of these is $5,000 each ($6,000 over age 49). Which is better? Well, it depends on your age, circumstances, income level, etc. We can cover that in another posting.
When filing your 2009 return, don’t forget to add property tax to your standard deduction (if you don’t itemize). I have seen a lot of people miss this deduction on their 2008 and 2009 returns. These can be amended if you missed it on your original filing.
Starting in 2010, non-itemizers will no longer be allowed to increase their standard deduction by up to $1,000 of property taxes paid, unless Congress acts to extend this break. We’ll keep you updated on this issue.
