Five Things You Never Knew You Owed Taxes On – And What You Can Do To Conquer Them

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Just when you started to get the hang of taxes, each year filing the same way and logging your deductions like a good little taxpayer, the IRS comes out with a new law or changes to the existing one that any normal person would hardly be able to tell. There are a few areas that are not so small yet they fall under the radar of many law-abiding, tax-paying citizens.  Want to try and use these last few days before the inevitable and get ahead on these tax surprises? Here’s what they are and how you can soften the blow:

When You Win the Lottery, You’re Not The Only One Winning

Just when you see those flashing winning numbers you think of the myriad ways you’re going to spend your cash.  But there’s one thing.  Don’t forget that the government wants a cut of your prize too.  Since it falls under the category of income, like everything else on our list, you will have to pay taxes on it free and clear. Anything won during trips to the casino also comes under this category, including boats, houses and other stuff. When it comes to these non-cash winnings, the IRS will likely receive a 1099 from the prize issuer so be sure to accurately report the fair market value of your items or you could face an IRS review.

Sure, They’re Unemployment Checks But It Is Income

Even though those unemployment checks are not even close to what you were making before they are still considered income and you still have to pay your taxes due.  You can combat the problem of having a large bill at the end of the tax year by electing to make estimated tax payments. No matter how you look at it though, the IRS will take its cut on money “earned” through unemployment benefits.

Debt Settlements Come Back To Haunt You At Tax Time

Settling your debts with debtors seemed like a good idea at the time, didn’t it?  It turns out that by (tax) law, you are required to pay your dues on forgiven debt since it is counted as earned income.  Sounds like a double whammy with both the credit report ramifications and then having to pay taxes on the reduced debt amount.  But there is some good news for homeowners that receive mortgage debt relief between 2007 and 2012.  As long as the debt was for a primary residence, is under $1 million for those that are married but filing separately ($2 million for everyone else), in most cases that debt is not taxable.  Here are Ten Facts for Mortgage Debt Forgiveness posted on the official IRS website.


One More Reason To Get Angry At Your Ex

Just when you started to get over the anger at your ex, along comes one more surprise that will provide plenty of ammunition to get angry at them all over again.  If you were awarded alimony you have to report that as taxable income.  If you are the supporting spouse, however, one small consolation is that you can deduct the alimony payments.  The good news is that child support does not make it on the IRS’s list of taxable incomes, so you’re good to go in at least one way.

Not-So-Secure Social Security

Just when you thought you could kick back and enjoy the returns from years of paying your social security dues – you’re slapped with needing to pay income tax on your social security income.  That’s right.  Believe it or not, depending on whether or not you have other sources of income, the IRS may or may not require income tax payment on a large portion of your social security income.  Maybe getting a second job now, while you’re ahead, may be in order after all.
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With our economy as tough as it has been, nothing is more daunting than the need to pay a large chunk of money at the end of the tax year.  The best way to manage this is to put away a little at a time or arrange for special voluntary deductions using an estimated payment formula.  For more information, talk with your tax advisor before it’s too late.

Major Changes to FHA-Backed Mortgages; Courtesy Obama’s Latest Plan

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A special thanks to Bridget Olson of Century 21 Real Estate for being in the video. Call her at 402.218.6021 or email her at wcoastproperties@aol.com.

Here’s one more move Uncle Sam is making while under President Obama’s umbrella that will lighten the heavy load shouldered by many homeowners facing foreclosures in the wake of the nation’s recent foreclosure crisis.  With the idea that anything the government can do to help homeowners keep their homes despite the industry’s recent ups and downs, the administration’s announcement comes with much relief to both the mortgage industry as well as homeowners that have the potential of losing their properties.

The plan, already in place and being implemented by many mortgage professionals across the country, will serve to cut insurance fees paid by the mortgage owner for FHA-backed loans.  At a time when every dollar counts during this weak economy, this comes as a welcome concession for many families and homeowners struggling to make ends meet.  The government hopes that with this new plan, mortgage holders are compelled to refinance their loans and avail lower interest rates while benefitting from a lower cost of insurance on the mortgage.

Lower Fees Amount to Big Savings for Homeowners

Under the plan, most FHA-insured mortgages can be refinanced at half the current fee; combating future expected rising mortgage insurance premiums in the years to come.  Further, the premium charged at the time an FHA loan is established will also be reduced.  The administration pegs this as hopefully being the motivation millions of homeowners will need to initiate refinance applications on their current higher-interest rate mortgages.

Currently, Private Mortgage Insurance fees amount to the equivalent of 1.15% of mortgage holders’ balance each year.  The new plan now cuts those same fees to just 0.55%; almost half the fees homeowners are currently paying.  Not only that, loan insurance premiums will also be reduced ten times as much as the current amount paid up front by FHA buyers.  This not only translates to significant savings at the time of refinance but it also eases the burden on homeowners on a month-to-month basis, allowing them to tackle more of the loan’s principal and interest.

How Does a Homeowner Qualify for This Money-Saving Program?

The first thing you should do is to contact your loan officer.  The program is designed to assist as many as three million homeowners, mostly first-time homeowners or those that qualify as low-income buyers.  To find out whether you fit the criteria, your loan officer will assess your home purchase and determine eligibility.

This program provides the additional ease of only requiring 3.5% down on the purchase and the requirement to prove employment is waived.  Underwater or distressed property mortgages are also eligible.  Your loan officer will be able to determine which type of program best suits you, in case there is another federal housing program that better suits your needs.
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It is too soon to see whether this move to ease some of the financial burdens of struggling homeowners will have a significant impact on the housing industry as a whole, however with overall lower interest rates obtained and reduced up-front insurance fees there is much to gain.  Industry experts also say that this plan will help boost job growth, which in turn will hopefully stimulate the economy.

To find out if you qualify to save hundreds on your mortgage each year and each month, contact your mortgage officer today!