The Federal Tax Credits Blog

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Question: Cashing in a savings bond — Tax Concern?

When I was young, my grandma would buy me (and my brothers) US Savings Bonds. I am now a grown man, and I am still holding on to them. Well, I have some home improvements coming up, and I could take out a home equity loan or line of credit to pay for them. But I’ve got these savings bonds sitting there just collecting dust. So I could cash them in and offset the amount of equity I’d have to use for these improvements. But here is my concern. I know that if you cash them in, you have to claim the interest earned on your federal taxes. So let’s say I have a $2500 savings bond that is now worth $5000 (so it has earned $2500 in interest). If I would cash that in, how badly would I get hurt come tax time? Can anyone tell me approximately what percentage of that $2500 I would end up having to give back to Uncle Sam? I am just trying to avoid getting myself into trouble, where I’ll end up owing $2000 next year. That would pretty much defeat the purpose of cashing them in.

Answer: The percentage you would pay would be based on your other income, it’s hard to say without knowing your situation. On $2500 it would range from about 10% up to 35% depending on your income. Most people about 15%.
A way around this for the future, if your children get savings bonds, you can file a tax return for the child each year, declaring the amount of interest the bond earns that year. Unless your kid is quite wealthy they won’t pay any tax yearly and when time comes to cash the bonds they will already have been declared and no tax is due.

Know the code: claiming credits; Pay attention to these if you want to reduce your federal tax liability

Editor’s note: This is the second in a series of three articles examining tax changes that took effect in 2009, some of which were due to the American Recovery and Reinvestment Act. This week, The Bulletin looks at changes to nonrefundable tax credits, which reduce the taxes you pay the federal government.

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Tax Credit for Replacement Windows

Question: Am i a first time home buyer?

My father was about to loose his house a few years ago. To prevent it we refinanced and i was added to the loan. I recently bought my first house and I am curious if i am considered a first time buyer. I am planning to file to get the 8,000 dollar tax credit but not sure if i will qualify.

Answer: Were you added to the title when you were added to the loan? If you were, no, you are a property owner and would be committing tax fraud if you were to file a credit you have no entitlement to.

Job loss probably nixes chance to refinance

Q: I am a 59-year-old single woman who was recently laid off from a computer consulting job. I have six years left on a 15-year mortgage at 5.75 percent. The balance is about $70,000. My condominium is worth about $145,000.

News You Can Use Story 1 – Homebuyer Tax Credit

Question: Are there certain qualifications a house must have to get the first time home buyer’s tax credit?

My husband and I have decided to buy a home. It will be our first time so we should qualify for the tax credit. However, someone mentioned to us something about there being certain qualifications the home you intend to buy must meet (such as no broken windows, etc). I’ve tried to find this so called list but haven’t been able to. Does this list really exist and if so, what is on it? It sure would be nice to know so that we can take those things into consideration when house hunting.

Answer: No, you can buy whatever you want. The only restriction is that you live in it.

Job loss probably nixes chance to refinance

Q: I am a 59-year-old single woman who was recently laid off from a computer consulting job. I have six years left on a 15-year mortgage at 5.75 percent. The balance is about $70,000. My condominium is worth about $145,000.

First Time Homebuyer Credit Coming to an End

Question: Is there a new tax rebate/credit for buying a foreclosed home?

Im in the process of buying a foreclosed house. I already know of the first time home buyers credit. I heard that there is a new credit/rebate for buying a foreclosed home. Is this true and can you give me all the specifics? If it is true, would I be eligible for the first time home buyers and the foreclosed home buyer credit?

I already know I meet the guidelines for the first time home owners credit

Answer: I am not aware of any such credit. But if you qualify for the First-time Homebuyers credit, you should definitely take advantage of that.

Land trust striving to provide affordable housing

Despite the recession’s clobbering of home values across the nation, there is still a need for affordable housing in Carson Valley, said real estate agent Anje deKnijf. “As home prices have fallen, incomes have fallen,” deKnijf said Dec. 18. “The beauty of our program is that as house prices drop, we can do even more. Each house will eat up less of our funds.” In a time of great instability in …

Real Estate Conditions 5 – Mortgage & First Time Home Buyer Dec08 Attorney & Loan Modification