Any Tax Professionals out there?

Question

OK, I am itemizing this year since i just purchased a home. What i need to know is, what part of my closing costs, if any can i deduct (besides taxes and interest). Also, can i deduct my medical and dental insurance premiums? The IRS books just don't tell much, thanks in advance for any help!!

Answer 1

if you paid any points at the closing you can deduct them. Be aware that some banks don't report points paid on the year end statements form 1098 they mail to you. If not, then you have to refer back to closing statements to obtain the amount paid.
Form 1098 usually summarizes additional taxes paid that are included in your monthly mortgage payments. The bank usually holds these payments in an account called an escrow untill the bill is due.
As other people wrote there is a deductible for med & dental expense of the first 7.5% of your gross income. In most cases your med & dental need to be high to be above 7.5% level. For example, if your income was 50,000 you would need expenses over 3,750 to be deductible.
If you pay your own insurance premiums thats included as med. exp.

Answer 2

You need to look at Part 5 of Publication 17 rather than the instruction for Schedule A for all of your answers.
http://www.irs.gov/publications/p17/pt05.html

Cost for doctors, dentists and travel expenses (gas, parking, tolls etc) are all deductible. However, only the amount that is greater than 7.5% of your adjusted gross income (line 38 of 4010).

Insurance premiums are also part of medical expenses, but only if they are paid out of after tax dollars.

Points and interests for your house are deductible. Most of the rest go to the base of your house which you will deduct to reduce capital gain when you sell.

Given that you bought toward the end of the year and this is your first home, amortizing the points will probably be more beneficial than taking it all at once this year.

Don't be surprised to find that you might still be better off taking standard deduction this year. If you don't have much else to itemize and not yet paid a whole year worth of interest, standard deduction might still give you better tax treatment.

Best wishes.

Answer 3

You can claim points paid (origination cost), plus a lot of times you pay part of the real estate taxes and mortgage interest. Look at your HUD-1 Statement, the second page, in the "Paid by Buyer" column, that should show you what RE taxes and mortgage interest if any you paid at closing.

Everyone else touched on the medical part, but chances are you wont get any deduction for it since it has to be way high for you to claim anything (or your AGI way low).

Answer 4

you are definitely allowed to deduct medical and dental premiums IF YOU pay them, and NOT if your employer pays them. If you pay part, you may only deduct that part.
http://www.irs.gov/taxtopics/tc502.html

As for the closing costs . . . did you pay 'points'? If so refer to this page of the irs site:
http://www.irs.gov/taxtopics/tc504.html

From what I can tell is that most of the closing costs are not tax deductible until you sell your house, then they are included in the cost or basis of the home, and used to determine the loss or gain on the property. It's been a while since I've done this, but that's what I remember. So, look at these IRS pages and see what they have to tell you.

Remember that the interest you can claim may be limited if you made too much money.
http://www.irs.gov/publications/p936/ar01.html#d0e119

Answer 5

If your premiums are taken out of your salary pre-tax, then no you cannot claim them. They are already reducing your salary that gets reported on your W-2.
As far as I know, you can only deduct taxes and interest from your closing.
Not sure what IRS books you have been reviewing, but be sure to check out Publication #17 at www.irs.gov - - It might recommend other publications that go into greater details.

And for the guy whose girlfriend is saving receipts for 'improvements' like shrubs - - you can't deduct those, yet. Home improvement expenses can be used to decrease the profit on the sale of the home (that means the GF has to sell the house in order to claim those expenses). And all those expenses do is offset the gain on the sale. Your GF is an audit fiasco waiting to happen if she tries to claim those things now.

Answer 6

i don't really have a full answer, but did want to throw in that my girlfriend just bought a house and i do believe she plans on claiming all the plants and bushes and little improvements we have been doing which is starting to make a nice little pile of reciepts. but i think the seller ate the closing costs. i do know you can deduct the actual medica and dental costs...but not sure about the premiums, but would be surprised if you couldn't. are they taken out pre-tax? (is that possible)

Answer 7

Any Medical/Dental premiums above 7.5% of your adjusted gross income are deductible. for ex, AGI = 30,000 30,000*.075 = 2,250 anything you have paid in medical dental bills and premiums above 2,250 is deductible. and until you sell the house only taxes and interest are deductible.

Answer 8

No, I am suck at taxes.