homeowndership/tax refunds?

Question

I bought my home last year in late december, so far i have paid about 10,000 in interest, what i am wondering how much of that will i get back. I also went to h&r and they guy who did my taxes barely new how to type let alone do my taxes, he didnt use any of my down payment or any of the fees that i paid at closing. can i put closing fees and down payments on taxes? i was scared to do my own taxes because i thought since i bought a house it would be a more complicated story. oh crap i just realized i owed 30 dollars in taxes to california and i forgot to send them what can i do now. i moved from ca to wa last year. any help is great thank you.

Answer 1

Get a copy of TurboTax and do it yourself; heck of a lot cheaper than the services like Block.

Yes, this guy missed out totally. TurboTax has an interview process that covers all the bases; I've used it for years. And the cost of TurboTax is tax-deductible as well!

The interest paid comes off the top of your income. That is, if you made $40,000 last year and paid $10,000 in interest, your taxable income is $30,000 (minus any other deductions you have, like your personal deduction, etc).

Answer 2

Well, maybe he can't type, but he DOES know something about taxes. Your down payment has nothing to do with your tax return and neither does most of the closing costs. The only item on the HUD-1 form that might be deductible is prepaid interest and possibly property taxes. However those are also listed elsewhere so there's no need to mess with the HUD-1 sheet. Since you bought it in December there's probably not enough in itemized deductions to be worth claiming anyway and he knew emough about taxes and your situation to recognize this.

Now, for this year you can deduct the mortgage interest and property taxes paid during 2007. If you're single or Head of Household there will be enough to make itemizing worth while. If you're married, it may be close as your interest is very close to the standard deduction amount for a couple filing a joint return.

Just send the money you owe to CA to the FTB.

Answer 3

Your down payment doesn't have any tax effect, and the only part of closing costs that might is anything that was interest or real estate taxes, so sounds like the H&R guy did right.

Mortgage interest and real estate taxes are eligible tax deductions, but only if you itemize. You only itemize if your deductions total more than your standard deduction for the year, the amount you get automatically without proving anything - on your return, you take either your itemized or your standard deduction, whichever is higher. If you're single, standard deduction for 2007 is $5350 - if you're married it's $10,700.

Your tax benefit from having the house and itemizing is your total itemized deductions minus your standard deduction, times your tax bracket. No way to tell from your question how much your total itemized deductions will be or what your tax bracket is, but if you are single, your total itemzed deductions including the mortgage interest is $15,000 and you're in a 25% tax bracket, your tax savings would be around $2400 - if married, total itemized deductions $15,000 and 15% tax bracket, savings would be $645. Substitute in your own numbers, do the math for an estimate of your tax savings.

Answer 4

Down Payment - Not deductible
Closing Costs - Mostly Not deductible (except for points).

When you purchase your home late in the year, you usually don't see a tax benefit that year. You will see it this year.

Find your paperwork and mail CA the $30. You will owe some interest but maybe not enough for them to pursue.

Going forward, if you are not comfortable with your preparer, ask for a new one or find new one on your own. The paperwork belongs to you. You can pick it up and leave at any time. I know some Block preparers that are tax geniuses and some who are complete morons. Where ever you go this year, ask for someone more experienced and find someone that you are comforable with.

Answer 5

1. Send the $30 to California now. There may be a penalty for being late or interest charges, but if the amount that you failed to pay on time was only $30, it should not be much.

2. You cannot deduct a downpayment on a mortgage. You did not ask this, but you also cannot deduct payments of principal. Only the interest can be deducted.