Q&A: Students, mortgages
Tax pros help readers with student taxes, mortgage deductions, and refunds.
February 27, 2002: 6:21 a.m. ET
|
NEW YORK (CNN/Money) - Mortgage points are deductible over the life of the loan, students earning less than $7,450 can receive all taxable withholdings back, and tax refunds from 2000 are not considered income.
Those are among the answers to reader's questions this week in our latest Q&A. Check back with our Tax Center page every Wednesday from now until the filing deadline, April 15, for more.
This week's questions are answered by Cindy Hockenberry, an enrolled agent with the National Association of Tax Practitioners, and Tony Bardi of the National Association of Enrolled Agents.
I sold my condo last year and I will put the money that I made in a house that I have a contract on. What form do I use so I don't have to claim the money as capital gain? Someone told me that I have 18 months. They were not clear on the subject. Thanks. -- Joyce
Hockenberry: If the condo was your principal residence, and you owned and occupied the condo for at least two out of the prior five years, the gain is not taxable. The sale is not reported on your tax return unless you received a Form 1099-S reporting the sales proceeds. In that case, the sale is reported on a Schedule D, and attached to y our 2001 tax return. The gain is still not taxed even though it must be reported. There is no requirement to purchase and occupy a new home within a certain period of time. Those rules were repealed in 1997.
If I am a full-time student and a full-time employee, would I be able to get all my income tax that was withheld back, or would it just be a partial. Thank you. -- Eric
Hockenberry: It all depends on how much you earned and what amount of tax was withheld. Assuming you are single and can claim yourself as a dependent, you will get all your federal withholding back as a refund if your only income was from a wage (no interest or other sources of income that had no withholding) and the income was no more than $7,450. You will be able to reduce your taxable income to zero if it is less than $7,450 because the standard deduction and the personal exemption ($4,550 plus $2,900) equal that amount. If you earned more than $7,450, you will not get all your withholding back unless there are other factors, such as credits that you are eligible for that reduce your tax liability.
I refinanced my home mortgage last year. Is there any tax benefit related to the refinance? As in ... can I deduct refinance fees? I will be itemizing to take advantage of mortgage interest. Thanks. -- Troy, Houston
Bardi: When a homeowner refinances their mortgage they oftentimes pay points. Points are usually expressed as a percentage of the loan amount. (One point would be one percent of the loan amount.) Points are considered prepaid interest and are deductible over the life of the mortgage on a straight-line basis. If you had previously refinanced your mortgage and paid points at that time, you would be able to deduct the remaining points when you paid off that loan.
Do I have to deduct the $600 I received last year from this year's return? -- unnamed
Bardi: The $600 you received last year was a rebate or advance refund for your 2001 tax return. The rebate is not considered income. In fact if you did not get the full amount for your filing status -- $600 Married filing joint, $500 Head of household, and $300 Single -- it is possible that you could get an additional refund when you file your 2001 tax return. The rebate was originally based on your year 2000 taxable, but if your taxable income went up when you file your 2001 tax return you will get an additional refund.
Last year my income tripled, and I made more than $215,000. Other than my donations to charity, I have few deductions. Could I invest a lot into an IRA before April 15 and deduct it? Or is only $2,000 deductible? I just started my company's 401(k) this year. -- Nathan in New York (of course New York & New York City taxes are outrageous, too.)
Bardi: Other than the obvious -- relocate to a state where taxes are lower -- there is not a lot that you can do. I'm assuming that you are a wage earner and get a W-2 form. If you are there is not much you can do. The limit for IRA contributions for 2001 is only $2,000 and if you have a pension plan at work you cannot contribute to a Traditional IRA and deduct your contribution. And based on your income you are not eligible to fund a Roth IRA. However, if you are self-employed you can still set-up and fund a SEP-IRA before your tax-filing deadline including extensions. 
|
| SPECIAL: |
|
|
|
|
|
|
