Income and Property Taxes

[TrashMaster G]

We were first time home buyers last year (closed 7/31), so this is the first year we are likely to itemize our deductions. It's not a done deal from what I can eyeball, given the partial year involved.

So, a few general questions here:

1 - TurboTax - I've never used it before, but I have heard raves. When does it come out? Will it tell me what form I need to use to file (1040 vs 1040A, for example)? Does it include Schedule A, etc and tell me what tax forms I need to receive from my emploer, mortgage company, etc? Does it facilitate e-filing?

2 - E-filing - What are the restrictions? How do you submit your W-2s, etc?

3 - Do I need to communicate with my mortgage company now? How do I make sure they pay my property tax bill? Will that cover all property taxes, including school dist., etc?

4 - Other than property taxes, what is in my escrow account with the mortgage company that I need to be concerned with?

5 - Itemized deductions - Any hints, tips here?

Thanks for any advice.

 

[TennesseeHorn]

TurboTax is pretty good. I think if you have a REALLY complicated tax return go to a Tax Accountant. However, what I like about TurboTax is it gives you a running total of either: taxes owed or refund due as you complete the process. It also walks you through the tax process by asking you very simple questions. I recommend it.

 

[TrashMaster G]

Our taxes will not be really complicated. Regular income, child tax credit, mortgage interest, student loan interest, charitable donations, that's really about it. No investment stuff aside from the house purchase.

 

[JinSA]

Go to 401K.com: Turbo Tax is only 9.95. I hope that helps. But Turbo Tax does everything for you. All you need is the forms.

 

[tropheus]

you should receive a receipt from your taxing authority with respect to property taxes in the near future. Also, your mortgage company should confirm taxes have been paid if you check on line or call their customer service line.

The mortgage company will send a form (IRS form) showing taxes and interest paid that you send in with your tax return.

As for your escrow -- is the mortgage company obligated to pay your insurance? If so, the premiums are paid out of your escrow.

 

[B]

You can deduct property taxes against income during the year in which the taxes are paid, not the year the taxes accrue. What this means is, if your mortgage company did not pay your 2004 property taxes until January 2005 you can't take the deduction until you prepare your 2005 tax return in 2006. This is why I waive escrows and pay my own taxes and insurance, so I control the timing.

 

[TrashMaster G]

B - Yeah, I'm aware of all that. I know that my mortgage company paid the taxes prior to 1/1.

 

[PacSER]

Do we pay sales taxes when we buy a house in Texas? I can't find a line item for sales tax on any of the paper work. I'm guessing that means home purchases are exempt from sales tax. Thoughts?

We also closed this year and I am going to calculate my own sales tax. I have aniticpated this all yr and have many, many receipts. I don't think it will be more than my slot, $629, but it's worth a shot.

 

[flyingdoggystyle]

That’s good you’ve saved your receipts b/c there is a new tax law this year that really helps TX residents – the irs said that you can now deduct state and local general taxes instead of state and local income taxes as an itemized deduction. (Since TX doesn’t have income taxes, we can deduct sales tax instead.) There is a table you can use to figure out what to deduct (based on your AGI and # of dependents). If you saved your receipts for the year and they add up to more than the amount on the table (they will if you made a big purchase last year – car, boat, etc.), then you can deduct more than the amount in the table.

Anyway, I do income taxes for people at night and on the weekends. You can bring your paperwork over to my house (or mail it) and I’ll do your tax return for you for you if you’d like. Here is my website.

The Link

I saw that someone asked about sales tax on a house. You pay sales tax on cars, boats, motorcycles, and almost everything else, but not a house. You pay property taxes on a house. If you buy a house mid-year, then you can only deduct your portion of the property taxes, not seller’s portion. The title company projects annual property taxes based on last year at closing and at the end of the year the buyer pays all property taxes but can only deduct an amount equal to total paid less what seller paid per the closing statement.

 

[77horn]

1 & 2 - I have used turbo tax for 5-6 years and been very happy with it. The last 2 years I have done it online (to to inuit.com and follow thel ink). They will e-file it for you (you just select paper filing or e-filing. With paper it will print your return- no need to go get forms). Depending upon you employer, you may be able to download your w-2 straight into the return. If you e-file you won't actually submit paper W-2s. It is all electronic.

3. The mortgage co will send you a statement by the end of Jan. But they need to have paid taxes in December or they won't be deductible for '04.

4. Escrow accounts, If you can get rid of you escrow account. Generally you must have 20% equity to do this. (You'll also need some financial discipline to make sure you have the money when your insurance and taxes come due.) The bank is allowed to keep more in your account than you acctually requre, before they give you any back. The stupid thing is one month we'd get a refund on our escrow, then the next get notice we didn't have enough in our account, so they were raising our mortgage payment.

 

[BattleshipTexas]

Real estate is not subject to sales taxes in Texas. Annual Property Taxes out the wazoo though.