Does a mortgaged home purchase impact your federal U.S. tax return in any way?
121176
My federal return was $2,800 and state was $170 last year and $4,800 and $1,200 this year which seems like I made a mistake somewhere to be that high.  Nothing else significant changed between last year and this year besides buying a house in California. With form 1098 listing $4,670 for box 1 (mortgage interest) and $4,690 for box 6 (points paid on purchase of principle residence) as well as $3,500 on property tax.  Just wanted to double check that this type of increase on tax return is normal for owning a house? I don't want to make a mistake during filing.
107977
I have $10,000 extra cash that I can either use to pay down my 5% mortgage, or contribute to my IRA.  I'm 30 years old.  I hope to pay off the mortgage in about 5 years.  I'm stymied, because:   Paying $10,000 into my mortgage earns me $500 a year (in interest savings) for the life of the mortgage -- hopefully 5 years. Paying $10,000 into my IRA earns me roughly a $3000 lowering of my tax bill now (plus CD ROI of about 1% at retirement time.)   So I can get $2500 ($500 a year over 5 years), after which I will have paid my mortgage off with other money; or I could get $3000 in cash right now plus a bit of extra money when I retire.  Even ignoring the future benefits of the IRA contribution, it feels like I should put the money into my IRA: it's an immediate 30% return on investment, as opposed to a 5% return for 5 years.  But if I always make that decision, I won't be paying off my mortgage early, and that $500 will stretch out over 30 years, costing me $15,000!  Which actually leaves me with more money in the end?  What basic principle of math am I missing?  Update:  The principle of math I was missing is that, assuming I'm taxed at the same rate when I retire as I am taxed now, I end up with exactly as much money as if I had invested the $10k and not received a $3k tax reduction.  (Of course, my income level and tax laws will have changed by then, but let's ignore that.)  So the question simplifies to, "Should I put $10k toward eliminating a 5% debt or toward a 1% investment?" in which case I should clearly put it toward the mortgage.  I was confused by the government incentive into thinking that retirement investment was a sweeter deal than it actually is.  This is probably their goal, and probably a noble one :)
72690
General question here about US personal income federal tax rates.  Is it a cumulative effect where your income is first taxed at the lower tranches and move up, or is it one specific percent for your entire taxable income?
95074
I recently sold an investment that has generated a capital gain that is a substantial fraction of my 2020 income. My brokerage did not withhold tax (I think that is normal), but I am now materially underpaying my federal income tax for 2020 (ignore the state and local tax, somehow my employer over-withheld those). I have never done an estimated tax payment before or filled out a 1040-ES. Can I just make a one-time, one-off payment here: ? Do I necessarily need to fill out a 1040-ES or can I make an educated guess at the tax (did some excel sheet math and have an idea of what the number should be)? Edit: also, how would I go about reporting this one-time payment when I file my 2020 taxes?
41166
I used an HSA to buy some contact lenses.  They came with a rebate form that I can send in to get a refund of about 1/5 of the purchase price.  Is it okay to send away for the refund after using the HSA to buy the contact lenses?  If I get the refund, do I have to deposit they money back into the HSA, or can I spend it any way I wish without having to pay any tax penalty on it?  If I get the rebate, do I need to declare it when I do my (USA) taxes next year?
30360
Specifically, I notice that on a mortgage statement, my payment is "amortized" so that at the beginning of the loan, I am paying almost entirely interest and very little principal.  However, on a credit card balance, it seems interest is only charged on the balance.  Why do amortization schedules work the way they do, and are they typically used for most loans, and why?
97047
I just bought a house. Now I'm getting ads in the mail every day or two trying to get me to sign up to pay my mortgage bi-weekly (every two weeks) or weekly instead of monthly. In their words I could cut seven years and thousands of dollars off what I pay in long term. It seems like I would be paying the exact same amount of money, also.  I know "if something sounds too good to be true then probably it is". But I cannot figure out why in this case. What is the catch? Or is this something I should be signing up for ASAP?
42235
I am getting a settlement from a business over a suit but most of the settlement will go to the attorney to cover their fees incurred on contingency.  If the 1099 reports the full settlement, will I have to pay taxes on the full amount or if not, how do I tell the IRS it is not all taxable. Otherwise, I could easily end up owing more in taxes than I get for my small portion.
3669
I'm a US resident and I've saved &gt; $100k cash for a home deposit. I expect to finance a home in the next 12 months. Currently the cash is split between Bank savings account and a couple of money market accounts (like FMOXX). Are there higher yield, short term alternatives for this type of saving? Note I'm not after specific product recommendations, but general investment strategies for this type of situation.
71333
I am from Europe, and I did an internship in the US (California) in 2015. When filing my 2015 taxes, I ended up having to pay some small difference for the federal taxes, but got a refund on my state taxes, of roughly $1.6k. That was all the income I had in the US in 2016.  I did not enter the US in 2016 at all.  I managed to figure out that I don't need to file any California tax forms for 2016 (source: ) but I am not sure about federal taxes.  I tried researching the problem, and got some information on it, but the situation is still a bit unclear. It seems that since I listed my state tax as an itemized deduction in my 2015 tax report, which I filed in 2016, the state refund I got in 2016 is, in fact, taxable.  In this situation, would I have to file my taxes (and possibly pay owed tax) for 2016, even though I never set foot in the US in that year, and my total income is just $1.6k?
57989
I am in the United States, in Colorado.  I purchased a house in July of 2013.  It was in poor condition, so I spent the first two months repairing things before moving in.  Now, 11 months after moving in, I'm ready for a change.  Here's the plan.  I'm wondering what the tax implications will be?  Current house:   Purchased July, 2013 Purchase price: $72,000 Down payment / closing costs: $20,000 Materials and permits for repairs: $20,000 Sell in September, 2014 for $150,000, taking away ~$75,000 in cash.   Basically, I'll make $35,000 on the current house after all expenses.  How much do I need to put toward my next house to avoid taxes?  I have my eyes on a house for $130,000.  Ideally, I'd put $50,000 down, use $10,000 toward repairs/upgrades, and use the remaining $15,000 to pay off debt.
108248
My father has offered to pay up to $70k towards a down payment on a condo for my wife and me. I understand that gifts of over $13k get taxed pretty heavily. Is there a way to avoid this when it comes to him helping with the bulk of the down payment? If he co-signs, does that solve the tax issue?
68867
I hope this question is appropriate for SE Money but based on this one I think it is   If you are an American citizen not living in the US but a bona fide resident of European country and you work for a European company which has no clue what a W2 is what do you do when you report your taxes?  I'm also curious about FBAR reporting.   "The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported."  That's a rather low number especially if it's just used for a small buffer to pay bills and collect pay checks and not used for investing.  Anyone with a similar experience?
84536
I  own a website and I sell digital content. I'm a nonresident alien with the US. Most of my customers are US based so I was wondering will I have to pay any taxes to the US?  I have read that      For nonresidents, taxable income is separated into two categories:         Income that is effectively connected with a U.S. trade or business, after the deductions that are allowed, is subject to U.S. income tax   at graduated rates - the same rates that apply to U.S. citizens and   residents - or lower rates if the provisions of a tax treaty apply.   Income that is subject to U.S. income tax, for being U.S. source income, but that is not effectively connected with a U.S. trade or   business, is subject to a flat 30% tax      Is this true and do I belong to any of these categories?  If I form an LLC or C corp am I liable for this withholding tax?  My customers are based in the US and I believe all income is considered FDAP income according to the IRS:     Fixed, Determinable, Annual, or Periodical (FDAP) income is all   income, except:         Gains derived from the sale of real or personal property (including market discount and option premiums, but not including original issue   discount)   Items of income excluded from gross income, without regard to the U.S. or foreign status of the owner of the income, such as tax-exempt   municipal bond interest and qualified scholarship income      The thing is the IRS also says:     Effectively Connected Income, after allowable deductions, is taxed at   graduated rates. These are the same rates that apply to U.S. citizens   and residents. FDAP income generally consists of passive investment   income; however, in theory, it could consist of almost any sort of   income. FDAP income is taxed at a flat 30 percent (or lower treaty   rate) and no deductions are allowed against such income. Effectively   Connected Income should be reported on page one of Form 1040NR. FDAP   income should be reported on page four of Form 1040NR.   In the last quote, it’s like they say it only applies to passive income but if they feel like it, they can apply this to all income??
73597
I was paid a few hundred dollars to review a few textbooks. I submitted an invoice in Dec 2016, and received payment in Jan 2017. When I pay taxes on this income, does that count towards 2016 or 2017?  The context of my question is US federal taxes.
9220
One of my bank accounts earned $1.50 for the entire year.  Because the amount is under $10 they did not send a 1099-INT form.   Is this bank policy or IRS policy?  Does that $1.50 need to be reported?  I'm not worried about the difference that this small amount makes on my taxes bur rather what is legally required.
104496
I am getting audited....yay!  So here is the situation  In 2010 I worked for mega corp that paid my tuition for a qualified master degree program.  Obviously I am not entitled to an education tax benefit, but wait there is more.  In December of that year I left the company for other opportunities and paid mega corp back the tuition money in January of the following year.  What is the proper tax treatment of this scenario?  I claimed it on my 2010 year taxes even though I paid it off in 2011.  I based this decision on the IRS's wording about education loans.  IE you are entitled to the tax benefit when the tuition bill is paid not when the loan is repaid.  Thanks in advance for your help.