Home > Blogs > Trent Warner's Blog
35,225 views

Trent Warner's Blog

By Trent Warner Monopoly Builder | Mortgage Broker
or Lender in Cincinnati, OH
  • T A X C U T S ? - Ask your Accountant about these items?

    Posted Under: Market Conditions in Indianapolis, Financing in Indianapolis, Property Q&A in Indianapolis  |  November 1, 2010 6:36 AM  |  493 views  |  No comments

    Interest And Dividends (Schedule B)

    Bonds: Don’t pay tax on someone else’s interest (line 1)

     

    The price you paid for bonds purchased in 2003 may have included an amount for interest accrued while the previous owner held the bonds. You don't have to pay tax on that amount, even if it was paid to you as an interest payment in 2003. You do have to report the full amount of interest, though. How do you avoid being taxed on too much? You get to subtract out the "accrued interest." We'll take care of that once you answer the questions in the Interview.

     

    Tackling the "Diabolical D" Capital Gains or Losses (Schedule D)

     

    Although Congress has cut the tax rates for investment profits, the Schedule D where you report asset sales is still one of the most complicated forms faced by ordinary taxpayers. You needn't be intimidated, though. Make sure you get full advantage of some of the lowest capital gains tax rates in years. The mid-year change in long-term gain tax rates is sure to cause thousands -- maybe hundreds of thousands -- of errors on Schedule Ds This year. Make sure you're not one of the victims. For sales on or before May 5, the rate on long-term gains is 20%, except for those in the 10% or 15% tax bracket, whose gains are taxed at 10%. For sales on or after May 6, the rates fall to 15%, and 5% for lower-bracket taxpayers.

     

    Mutual funds: Don't overpay tax on your profits 

     

    This is a major threat if you redeemed shares during 2003. The fund will tell you how much you received when you sold shares, but it's up to your records to show your cost or other "tax basis." You subtract that from the amount received to figure whether you have a gain or a loss. Unfortunately, you have to rely on your records to figure your "basis" for you. Remember this: If you reinvested dividends over the years, your basis includes the amount you reinvested. Many taxpayers apparently overlook this fact and overpay the tax. If your records are incomplete, call the fund—most have toll-free numbers—and ask for help. Investing a little extra time on this point can really pay off.

     

    Inherited assets: Take advantage of stepped-up basis 

     

    If you sold assets that you inherited, you deserve a very special tax break. Inherited property enjoys a "stepped-up" basis, that is, your basis is generally increased to the value of the property when the previous owner died. The tax on any appreciation during his or her lifetime is forgiven. You're taxed only on appreciation after you inherit the asset. And if the asset has declined in value since you inherited it, you may claim a tax-saving loss deduction even though you're clearly financially ahead. (Retirement plans, including IRAs and 401(k)s don't enjoy this step-up. Such assets are taxed to the new owner just as they would have been taxed to the person who died.) The gain or loss from the sale of inherited property is automatically considered long-term, regardless of how long you owned the property before selling it. 

     

    One should consult with a qualified tax planning professional prior to implementing any tax planning strategies. If you are a financial planning, insurance, or mortgage professional receiving this newsletter, please call our office and introduce yourself to us.  We are always seeking to grow our referral network and expose more service professionals to our client base.

     

    Sincerely,

    Trent Warner    

    Sr. Mortgage Planner
    Union Savings Bank

    Cincinnati, Dayton, Columbus, Indianapolis, Lexington

    513.294.8020 - 24/7 Access

    twarner@usavingsbank.com

 
Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer