How the tax man helps after a storm.

If you live in the northeast and were pummeled by the October snow storm, Realty Times has a, well, timely, article dealing with the disaster loss tax deduction. Headlined, “How to Write Off a Disaster Loss For Property Damage” by Broderick Perkins, it’s on point.

“Next year, 2012, is supposed to be the year we lose it all, but 2011 came close. It's shaping up to one of the worst years ever for disaster losses.

“Thanks to tax relief, it's not the end of the world.

“The Internal Revenue Service (IRS) allows you a tax deduction for casualty losses, including losses due to property damage or destruction.”

Casualty losses are treated similarly to mortgage interest and property taxes, i.e., casualty loss is an itemized deduction included on Schedule A that are subtracted from your adjusted gross income, which reduces your taxes by reducing the amount of your income that is actually taxed.

Some rules,

“First, the deduction is only available to the extent that insurance or other forms of compensation don't cover the cost of damage or destruction.

 “Second, if the disaster carries a presidential declaration, you can immediately, after the disaster has the presidential declaration, amend your last tax return to deduct the loss. Otherwise, you must wait to file for the deduction with your next tax return.

“Third, state tax laws vary on casualty loss deduction and because the deduction can involve large amounts and complex calculations, you should seek the help of an enrolled agent, certified public accountant or other tax professional to help you complete you state and federal tax returns.”

 Read the full article here to learn more about casualty losses and your income taxes.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti AT vested.com - www.vested.com

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Tax Credit Creates "First Time Fraudsters" - WSJ

When it comes to greed, the real estate market appears to be the breeding ground for schemes. The so-called sub-prime mortgage debacle leads to the recession. To help pick-up the real estate market, the government (read "we taxpayers") provide an incentive in the form of a tax credit for first time homebuyers.

Just as the mortgage schemers found the weaknesses in the mortgage financing system, so too have others found weaknesses in the tax credit.

The WSJ writes,

It's hard not to laugh when viewing the results of the federal first-time home-buyer tax credit. The credit, worth up to $8,000 for the purchase of a home, has only been available since April of last year. Yet news of the latest taxpayer-funded mortgage scam has traveled fast. The Treasury's inspector general for tax administration, J. Russell George, recently told Congress that at least 19,000 filers hadn't purchased a home when they claimed the credit. For another 74,000 filers, claiming a total of $500 million in credits, evidence suggests that they weren't first-time buyers.

As a "refundable" tax credit, it guarantees the claimants will get cash back even if they paid no taxes. A lack of documentation requirements also makes this program a slow pitch in the middle of the strike zone for scammers. The Internal Revenue Service and the Justice Department are pursuing more than 100 criminal investi-gations related to the credit, and the IRS is reportedly trying to audit almost every-one who claims it this year.

And so it goes in America. Read the full column, First Time Fraudsters.

For your next title order
or if you have questions about what you see here,

contact Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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First-Time Home Buyer Tax Credit - Get yours while you can

From RealtyTimes.Com:

Home Buyer Tax Credit Ends Sooner Than You Might Think
by Broderick Perkins

You have less time than you think to cash in on the federal home buyer tax credit.

Unless legislation extends the deal, you'll have to close escrow by Nov. 30 to take advantage of the maximum $8,000 tax credit available for first time home buyers.

The federal tax credit for 2009 is only for first-time home buyers -- people who've had no ownership interest in a home in the three years prior to the purchase. Single and head of household tax payers can earn no more than $75,000. There's a $150,000 ceiling for married couples filing a joint return.

A tax credit is a big deal because, unlike a tax deduction which reduces your taxable income, a tax credit reduces the taxes you owe, dollar-for-dollar.

This home buyer tax credit can also net you a rebate if the credit is more than the taxes you owe. The rebate is the difference. If you owe no taxes, your rebate can be a maximum $8,000.

The Internal Revenue Service has posted Questions and Answers

Apply for your Home Buyer Credit by using IRS Form 5405

For your next title order
or if you have questions about what you see here, contact

Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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Getting tax advice

Attorney Julian Block writing in Realty Times--

Internal Revenue Code changes have averaged one--per--day over the past eight years ---- with 500 revisions in 2008 alone. Who's counting? Nina Olson, the National Taxpayer Advocate, announced the statistics in her annual report to Congress. An independent organization within the IRS, the Taxpayer Advocate Service helps taxpayers resolve complaints with the agency when problems cannot
be resolved through normal channels.

Mr. Block asks and answers the question, "Will Advocate Olson's reports convince our lawmakers to draw back from their drawing board? Not during these troubled times. Expect them to enact even more alterations to an already confusing code in the immediate future."

Individuals turn to tax professionals, CPAs, and Enrolled Agents, "who are neither attorneys nor CPAs, but who are former IRS employees or have passed rigorous tax examinations administered by the IRS." But there are alternatives, such as inexpensive adult education courses.

Block warns, "But people who need financial advice should be wary of free lunch seminars that are actually showcases for hucksters. Seminar sponsors usually promote their programs as educational events, with free meals thrown in. But the seminars generally feature hard -- sell pitches for substandard investments designed to enrich the sponsors -- many may be Uncle Bernie wannabes -- and impoverish investors, especially unwitting seniors."

Read the full article, Calling for Tax Advice the Inexpensive Way

For your next title order
or if you have questions about what you see here, contact Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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Revenge of the Tax Code

Chris Edwards of the Cato Institute says,

If it were a movie, it would be called "Revenge of the Tax Code." The complex income tax, which has bedeviled average Americans for years, is biting back at the elite who helped create it. Tom Daschle, former chief lawmaker in the Senate, withdrew his Cabinet nomination because of an "unintentional" $128,000 tax mistake. Rep. Charles Rangel, chief tax-writer in the House, is also entangled in a tax scandal, as is Tim Geithner, the Treasury secretary, and Nancy Killefer, another high-ranking nominee who has withdrawn.

"What is going on here?", Edwards asks. Mainly, it's the complexity of the tax code that causes good people to blunder into a tax morass and calculating folk to walk away from tax obligations.

The solution? "The solution to all these problems -- from the Enron debacle to Obama's tax-troubled nominees -- is to reform the tax code. With a simple and consistent base, taxpayers would know what they owe, and the IRS could easily enforce it. That is the promise of the "flat tax," which would tax all income once and create a level playing field with no tax-free loopholes," Edwards writes.

Has the time for a serious discussion of the flat tax come? We'll see. Read the full report here.

Vested Title Inc., 648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220. Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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