Cash Flow Planning for Life

This is the fourth installment of Tax Deductions & You: What You Need to Know which can also be downloaded from our free eBook library.

Although most people understand that mortgage interest is deductible, many people may not be aware that there are certain situations in which it actually creates a greater savings not to claim a deduction as mortgage interest.

Under Treasury Regulation 1.163-10T(o) a taxpayer may elect to treat mortgage debt as not secured by a qualified residence.

Once this election is made, it is effective for all subsequent years and can only be revoked with IRS permission. The advantage of this election is if a taxpayer has allowable mortgage interest that is limited by the $1,000,000 or $100,000 rules on indebtedness.

Let’s say you have a home equity loan that is used for a business. The interest deducted on a business return or “Schedule C”, in most cases, will create a greater tax savings than if the interest was deducted as mortgage interest.

Here’s an example:

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This is the third installment of Tax Deductions & You: What You Need to Know which can also be downloaded from our free eBook library.

A student loan is designed to help students pay for university or college. It is a calculated amount that should assist with the cost of tuition, books, and living expenses. This loan may differ from other types of loans in that the interest rate may be substantially lower. In addition, the repayment schedule may be deferred while the student is still in education.

Student loan interest is another form of interest that is deductible, but with limitations. These limitations are as follows:

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This is the second installment of Tax Deductions & You: What You Need to Know which can also be downloaded from our free eBook library.

Any loans that fall under the nondeductible category need to be reviewed along with your cash or equity availability. If possible, they also need to be re-characterized to a deductible form of interest.

An example of this would be having availability on a home equity loan (balance after transfer must be below $100,000) and paying off an auto loan or credit card. This will increase cash flow two fold:

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This is the first installment of Tax Deductions & You: What You Need to Know which can also be downloaded from our free eBook library.

When tax time roles around, you will need to take a look at the various types of loans and credit lines to see which are tax deductible and which are not. These may include:

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No one likes being audited by the IRS. In fact, last year, approximately 1.4 million taxpayers were audited, and I can’t imagine a single person enjoyed the experience. But when you learn how to properly take advantage of itemized deductions on your tax returns, suddenly tax accounting isn’t quite so stressful.

I don’t want any of you to face the stresses that come along with being audited which is why I wrote a new eBook that you can download for free, called…

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Hiring a consultant verses buying a new car; a lot of people believe they are comparable…

…when it comes to value received for dollars paid.

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Enacted on March 18, 2010, the Hiring Incentives to Restore Employment (HIRE) Act has two new tax benefits that are available to employees who hire certain previously unemployed workers (“qualified employees”).

Payroll Tax Forgiveness for Hiring Unemployed Workers:

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A very common question I hear is…

Should I purchase a tax deduction?

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Did you know?

You are not required to convert your traditional IRA(s), SEP(s) and SIMPLE(s) into one Roth IRA.

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If you’re a small business owner, here are 7 very important things…

Everything I discuss is also available in eBook form on my Web Site at: www.Makara-Assoc.com.

…you need to know:

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