I am a first time home owner. My question is do you recieve a credit for all the intrest that you pay?
Answer:
A credit? For what? From whom?
Assuming you itemize your deductions on your federal tax return, then you will be able to deduct interest from your income before determining the amount of tax you owe.
And don't forget property taxes
In some cases its tax refundable. Check with your tax advisor, and or mortgage broker.
on your taxes make sure you get a 1098 from the bank and you can get an credit for the interest also you get a credit for your property taxes as well
You have to pay a certain amount of intrest b4 its tax deductible I think. Check with whoever does your taxes or call your bank's mortgage department.
If you itemize your deductions you may take any interest you paid along with any taxes you pay in closing or another time during the year as a deduction. Frequently new home owners are surprised to learn that their standard deductions are still larger in the first year that they buy a home, particularly if they close late in the tax year.
You can deduct on your taxes.
If you itemize deductions, you get a deduction for home mortgage interest, not a credit. A deduction is a reduction in the amount o income subject to tax. A credit is as reduction in the tax due.
There are in general 9 elements in a federal income tax return.
1.Filing Status
2.AGI
3.Minus Deduction
4.Minus Exemption
5.Equal to Taxable Income
6.TAX is base on taxable income
7.Minus Credit
8.Minus Payment
9.Equal Tax due/ Refund
1) Filing status how U.S. government declare you under a particular category, it may be “Single”, “Married Joint”, Married Separate”, or “Head of Household”
2) AGI (Adjusted Gross Income) or another word INCOME. Any and all income be it from selling stock to wages.
3) Deduction, there is 2 kind and they are Standard and Itemized.
If you use Standard deduction for the year 2005 and if you are US legal resident and filing status is single then it is $5,000.00. which mean if you earn $5,000.00 or less it’s not taxable.
You use "Itemized Deduction" only if you can beat "standard deduction" the Itemized Deductions other wise known as Schedule A has 7 components and they are the following
1.medical and dental expenses
2.tax you pay
a.Income tax (on your W-2) or Sale tax (Need Receipt)
b.Real estate Tax
c.Personal Property taxes (car and boat tax)
d.Other tax (TDI)
3.Interest you pay
a.Home Mortgage inerest (copy of 1098)
4.Gifts to charity
5.Casualty and theft losses
6.Job expenses
7.Other miscellaneous
4) Exemption is something every one has however if you are dependent under the age 18 then they can take your exemption for them self. In the year 2005 the exemption is $3,200.00 that means if you earn less then $3,200.00 then there will be no tax.
5) Taxable income is the result when you take AGI minus Deduction minus Exemption. If your Deduction and Exemption are greater than your AGI then you have no Taxable income.
6) TAX is base on taxable income; you may be using a tax table or a schedule to find that amount,
7) Credit is there to reduce your taxes, Credit is better than Deduction and Exemption because it reduce tax
8) Payment is any money pay into the federal income tax accounts are it withholding or estimated tax.
Please also note that some credit is treated like payment like (EIC) because they are payment from the government.
9) Tax due/Refund is result from the calculation. If the tax is greater then credit and payment then it is a tax due. If the tax is less then credit and payment then it is a Refund or a –0- balance.
Yes, if and only if you are able to itemize on a Schedule A. Other common expenses taken on a Schedule A are Medical and dental expenses (subject to 7.5%) of your adjusted gross income, state and local taxes withheld (from your W-2), real estate/property taxes paid, home mortgage interest, job expenses that weren't reimbursed, and contributions made to charities or churches. All of the things mentioned above must be above the standard deduction in order to claim, depending on your filing status.
Standard Deductions for 2006
Single or married filing separately - $5,000
Married filing jointly or qualifying widower - $10,000
Head of Household - $7,300
The answers post by the user, for information only, BAnswer.com does not guarantee the right.
Other Questions and Answers: