Mortgage-based tax deductions.
Of all the deductions the federal government may be eliminating to avoid the looming fiscal cliff, mortgage-based relief measures may have the biggest impact on Californians. According to an article from The Wall Street Journal last month, the Golden State has the highest average mortgage break in the country, which is largely why Californians recovered a mean value of $33,901 in tax deductions in 2010.
As a result, the possibility that the mortgage interest deduction may be permitted to expire this year has many people concerned about their income tax rates in 2013. A number of California families rely on this statute to lessen their financial burden.
Unsure how this change in federal tax law will affect your tax planning? The San Francisco Chronicle recently ran a piece on the scope of the mortgage interest deduction to help California residents understand its effects. The newspaper reports that 27 percent of filers from the Golden State claimed the deduction in 2010. The majority of taxpayers, the source writes, don't cite the mortgage-interest deduction because doing so means they must make itemized claims rather than choosing the standard mortgage deduction. Since the set amount is typically higher - particularly for residents without high mortgage payments - most Californians select this option.
Despite the small percentage of people who benefited from the mortgage interest deduction, though, it is still very popular among taxpayers throughout the state. The California Association of Realtors surveyed 800 residents who purchased homes in the last year and discovered that almost 80 percent of them had taken the deduction into account when they decided to buy.
If you're concerned about the ongoing fiscal cliff negotiations and want to ensure that you don't pay more than your due next year, consult an experienced tax attorney at Moskowitz LLP in San Francisco. These professionals can assist you with your tax planning so you can make the most of available deductions.
In today’s age of technology we enjoy access to information at the push of a button. The latest advances in technology not only benefit us greatly, but also the government. After 9/11, the Patriot Act gave the government more access to financial institutions both domestic and foreign. Personal and business financial information is now readily, easily and legally available. The IRS and State have a more thorough and immediate information sharing policy. Foreign government agencies are also in on this cooperative effort.
Daily we are reminded of the economic shortfalls of this country and that the government wants and needs money. What better place to search for it than with the IRS and State. The aggressiveness of the IRS and State is unparalleled and the penalty for making a mistake is not just a fine but can be criminal prosecution on felony charges and long imprisonment.
Our law office is seeing more cases than ever of spouses being held accountable for their partners’ actions. Why so? Some married couples at tax time choose the option of filing separately. There are many valid reasons to file this way and if done correctly the IRS and State are satisfied. One problem is when one partner files and the other does not, but should. In fact it can be financially and emotionally devastating for the unknowing spouse.
With today’s far-reaching technology the IRS and State can find those that have not filed taxes and criminal charges can be filed against the non-filer and their filing spouse can be investigated. Filing separately may not protect the personal property or finances of the filing spouse. The government may take anything and everything to offset the tax liability. That means the filing spouse may be responsible for the spouse who did not file.
What can you do now if the government has not come knocking on your door and you know your spouse has not filed? Understand the benefits of the voluntary disclosure program. With the assistance of our law firm, you may be able to avoid criminal prosecution and the most serious monetary penalties.
In conclusion: married couples - be fully aware of the responsibility to each other to file and pay on time and correctly. If you have not filed your tax return see us immediately.
For more information or questions on this article visit www.stevemoskowitz.com