The Federal Tax Credits Blog

Archive for October, 2009

Question: bush housing bill for new home buyers?

am i reading this right, that i will get 7500 tax credit for purchasing my home July 1 08 and i’m a first time home buyer? is it that simple or are there other restrictions and rules?
i dont care who passed or what the reason is or how stupid it is. i know, but point being i get free money so just trying to see what the requirements are

Answer: This article has all the details. http://www.washingtonpost.com/wp-dyn/content/story/2008/07/30/ST2008073003077.html

FBI deluged by fraud cases from real estate bubble

The criminal cases against Brian W. King and Ronnie E. Brodie are typical of what the FBI is seeing as a result of the rise and fall of the real estate market. King, 42, of Virginia Beach, pleaded guilty this month to falsifying mortgage applications, obtaining more than $700,000 in loans he never should have qualified for by inflating his income.

Real Estate Conditions 7 – Mortgage & First Time Home Buyer Dec08 Refinance & Interest Rates

Question: Is the $8000 firs time homebuyer tax credit being extended?

also, is it october 31st or november 31st that it expires?

Answer: Right now it’s november 31st. Me and my wife are trying to buy right now and make that deadline.

Question: can u help with information on tax credit and child tax plzzzzzzz?

hi, i am working part time, 16 hours a week on minimum wage.my partner works 18 hours a week,also on minimum wage. we have a 8 month old girl. am i entitled to anything? i am struggling as i worked full time before i had my child and supported the family but my circumstances have changed. if i am entitled to something what would it be? many thanx

Answer: My wife had to cut down to 16hrs a week before we qualified.
As for how much you will get?
It is worked out by a computer, tax credits type your information in and it then tells them how much to pay you.
this is why so many people are being over paid.

We got £8,000 put into our bank last year, but i left it in there for the interest without touching it, and in april coming they WILL ask for it back or deduct it from this years credit.
but at least i’ve had a years interest on it.

Dont think you will get that much due to your partner working 18hrs, but phone them up and ask.

hope this is useful to you?

When you should borrow (and when you shouldn’t)

Comedian Jackie Mason once bragged he had enough money to last him the rest of his life, unless, of course, he bought something. When it comes to debt some of us are in a similar predicament.

John Hartwell on minimum wage and earned income tax credit

A lot has been written about the features and benefits that can make variable annuities a suitable vehicle for building a retirement nest egg. For example, current tax laws place virtually no restrictions on the amount you can put into a variable annuity and provide, subject to certain restrictions, that all of your earnings are tax-deferred until withdrawn. Variable annuities also enable you to choose from a variety of investment sub-accounts, portfolios that focus on various investment objectives—from capital growth through the generation of income to capital preservation—so you can choose how your dollars are invested. On top of all that, there are generally no tax consequences if you should decide to switch back and forth between the various sub-accounts.

Okay, so that’s what a variable annuity can offer. But what is a variable annuity? How does it work? And how can you determine if they might be the right place to put some of your retirement savings?

Here are some basics to help you understand variable annuities, and how they might fit into your financial future.

What Is A Variable Annuity?

Annuities can be purchased from a variety of financial services companies, including banks, insurance carriers, mutual fund companies and brokerage firms. Because they can be bought from a number of sources, many people do not realize that all variable annuities are contracts issued by an insurance company.

Under a variable annuity, both the investment return and the principal value will fluctuate; an investor’s shares, when redeemed, may be worth more or less than the original cost. While this carries varying degrees of investment risk, depending on the type of portfolio you select, it also gives you the potential to benefit from any increase in value the portfolio may experience. Investors, such as those combating the challenge of inflation, may be willing to accept that added risk in exchange for the potential to outperform the rate of inflation. It all depends on you—your financial needs and goals, your time horizon, your feelings about risk and reward.

Charges and Payout Options

Variable annuities are designed to help you meet long-term goals and are generally not suitable for short-term investing. They are generally subject to a variety of charges, which can include a sales load, an annual contract charge, mortality and expense risk charges, administrative charges. They can also include a surrender charge which is imposed by the issuing insurance company if you begin to withdraw before a specified time period—usually 6 to 10 years.

You may also be subject to IRS penalties if you make withdrawals before you reach age 59 1/2. If you are purchasing a variable annuity, you will receive a prospectus detailing these charges and penalties and which you should read carefully before investing

The Value of Tax-Deferred Investing

Taxes on your earnings under a variable annuity do not become due until they are withdrawn—a feature that can provide you more purchasing power after you retire.

Many people believe that all tax-deferred financial instruments place restrictions on the amount that can be invested. This is not true in the case of annuities, since the amount contributed represents after-tax dollars. This leaves it up to you to decide how much of your investment earnings you want to shelter from current taxes.

Should your financial objectives change, most variable annuities also allow you to reallocate your assets among the available sub-accounts—without incurring current taxes.

Would a variable annuity be a good fit for your financial future? That depends on your personal circumstances. You might want to consider speaking with an investment professional and your tax advisor before you decide whether or not any particular financial instrument is a good match for you. Someone experienced in the field of retirement planning can give you insights and explanations that can help you make the best decision for you.

Stocks Doing Right by Shareholders

These high-flying investments sport top corporate governance policies.

John Noveras on the $8,000 First Time Home Buyer Tax Credit…San Diego Real Estate

Question: $8000 new home-buyer tax credit applicable if buying from deceased family member’s trust?

My grandmother passed away and I am looking to purchase her house. The house now belongs to her trust, ‘the estate of …’. I will need to take out a $185,000 loan even with a down payment of over 20%.

IRS tax form 5405 states: “Who Cannot Claim the Credit” “You acquired your home from a related person. A related person includes: Your spouse, ancestors (parents, grandparents,
etc.), or lineal descendants (children, grandchildren,
etc.).”

It sounds pretty clear that if she was alive, I would not qualify. But by my interpretation of the wording, I am not buying this from my grandparent, a person; I am buying it from her trust/estate, an entity.

Do I qualify for the credit? If possible, please reference your answer. Thanks in advance!

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Answer: No….you don’t qualify. A family trust is still considered related because it belonged to your grandmother.

When your grandmother died, who inherited the house? If a non-relative got the house then you can purchase the property and get the tax credit.

How to turn in a tax cheat and other tax-season advice

Yesterday’s live chat on taxes had lots of answers for readers with questions on the homebuyer credit. Many of the questions had to do with divorce and separation and claiming the credit.