There are tax benefits some accountants don't even know about. Our office recently asked Ted Smith, CPA, an accountant in Ozark, MO, to come and speak with our real estate agents at our weekly office meeting. The information we learned was so incredibly helpful, not just for us, but for our clients. There are many tax benefits available in our area, and I asked Ted how he learned about them when other accounts didn't seem to be aware of them (or weren't passing them on to their clients). His response: I actually read the tax regulations...all of them. Hmmm....there's a novel idea. I realize that reading the tax regs has to be the most boring material known to man, but as an accountant, shouldn't you do just that? Ted did, and here are some hidden secrets he has uncovered:
First-Time Homebuyer Tax Credit....FOR HOMEOWNERS?!? That's right. You CAN own a home and still qualify for the tax credit. If you own rental property, but have leased your primary residence for the past three years, you qualify for the tax credit. Also, anyone moving from abroad that owned outside the country qualifies.
Midwestern Disaster Area Tax Benefits. Because of the storms of 2008, there are several counties in Arkansas, Illinois, Indiana, Iowa, Missouri, Nebraska and Wisconsin that were declared disaster areas. The IRS has a webpage which details the counties included in the Midwestern Disaster Area. The effective date of these benefits is June 1, 2008.
- IRA and other Retirement Plan Benfits: If your primary residence was located in the disaster area on the date of the storms, any monies withdrawn from your IRA and other retirement plans between June 1, 2008, and December 31, 2009, are NOT subject to the 10% early withdrawal penalty, and the income you must claim on the withdrawal can be claimed equally over the next 3 years. This is perfect for clients who are unhappy with the current state of their investments and would prefer to use the money to put down on a new home, or pay off an existing home.
- Cancellation of Debt: If your primary resident was located in the disaster area on the date of the storms, any cancellation of debt will not be considered taxable income. This is applicable to any debt canceled on or after the date of the storms, and before January 1, 2010.
- School Tax Credits: If your child attended a school or university in a county located within the Midwest Disaster Area, you benefit from DOUBLE the education credits. This includes tuition, room and board and supplies.
Hire Your Children: I actually looked at Ted and said, "But my son is only 11...isn't that child labor?" Guess what...it's not child labor when it's your own child. Does my son help me? You bet he does!!! I have always brought him with me when showing property to clients with very young children. He doesn't follow my orders that well, but he's a pro at making other people's children obey him. You can hire your child, as long as you pay him the usual and customary rate for the service being performed, whether that be babysitting, assisting in showings, or putting up real estate signs. You do not owe taxes on ANY money you pay them. Simply put the money in a savings/checking account to be used for their school clothes, birthday present, childcare, etc., and it's all pre-tax dollars. What a concept!!!
After an informative meeting at our office, I decided to have Ted prepare my taxes for 2008. You see, I have just been a target of an informal IRS audit wherein the IRS decided I owed them an additional $2,600 for tax years 2006 and 2007. Ted reviewed my taxes and recommended we file amended returns since there were several deductions that were available to me, but not utilized by my previous accountant or made known to me. Thanks to Ted's knowledge and diligent research, he was able to nearly wipe out any deficiencies for 2006 and 2007. Not to mention the superb job he did for me on my 2008 return.
With an accountant like Ted, tax time was not the gut-wrenching experience it has been in the past for me. Thanks, Ted!
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Lina Robertson Jones
Owner/Agent
RE/MAX Solutions
1715 James River Road
Ozark, MO, 65721 |
Mobile: (417) 844-7265
linarobertson@remax.net
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RE/MAX - Outstanding Agents, Outstanding Results!
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About the author: I am full-time REALTOR® with RE/MAX Solutions in Springfield, MO, and a member of the Greater Springfield Board of REALTORS®. I have helped hundreds of families in the Springfield, Nixa, Republic and Ozark real estate markets, whether buying a home, or selling a home. Visit my website at www.ozarks-realestate.com to search for All Springfield MO Area MLS listings. Want to know what our market is like? My website is also an excellent resource for current Springfield MO Area Real Estate Market Reports, as well as current market reports for Ozark, Nixa, Republic, and Rogersville.
Lina,
Thank you for your posting is very informative!
-David
David - Thanks for stopping by!
One mre is that if you are in real estate you can take a passive loss of up to 25k. Its a quirk for Realtors that own property.
Eric - Ted touched on that. My understanding is that in the past only brokers qualified for that, but it has now been amended to include all associates, not just brokers. Appropriately so. Thanks for stopping by!
Lina,
I came to your blog from Patricia Kennedy's Week in Review.
You got a darn good accountant for yourself. You understand that he is knowledgeable, and what more can you ask for.
You underscore the importance of using a good tax accountant. I like Turbo Tax, but I still believe it best to have an accountant in the end.
It hadn't occurred to me that if you rented out your primary residence for the past three years you were eligible for the tax credit. Of Course, that makes makes perfect sense!