The Tax Season is upon us and whether your income-type is W-2, 1099, or something else with lots of schedules, it helps to know for which deductions you may be eligible, and some key changes in the 2010 filing process.
Tax Filing Deadline Extended Past April 15, 2011
Most years, federal income taxes are due April 15. The deadline date is so common, in fact, that "April 15" has become synonymous with "tax deadlines". This year, however, taxes are not due April 15.
It's because of Emancipation Day, a public holiday observed in Washington, D.C since 2005.
Meanwhile, law states that District of Columbia holidays must impact tax deadlines in the same way that federal holidays do, so, because the IRS is closed April 15, federal income taxes cannot be due until the following Monday -- April 18, 2011. Many states are following the federal government's lead, too; extending tax deadlines to April 18.
2011 marks the second time in its 6 years that Emancipation Day has changed tax deadlines.
In an un-related coincidence, taxpayers filing an extension this year will also have a few extra days. Because October 15, 2011 is a Saturday, the taxpayer extension due date pushes to the following Monday -- October 17, 2011.
IRS : "Certain Taxpayers Can't File Until We Say So"
The IRS is open for business, so to speak, but not everyone is permitted to file their taxes just yet. This is because Congress enacted tax law changes during the last two weeks of 2010, and the Internal Revenue Service hasn't had time to update its systems just yet.
As a result, 3 specific taxpayer types are barred from filing tax returns until mid- to late-February, or until such time as the IRS says its systems are ready.
Those 3 groups are:
1.Taxpayers itemizing deductions via Schedule A. People claiming mortgage interest, charitable donations, and/or state and local taxes on their federal returns can't file yet.
2.Taxpayers claiming the Higher Education Tuition and Fees deduction. If you plan to submit Form 8917 to the IRS, therefore, you must wait to file.
3.Taxpayers claiming the Educator Expense Deduction. This applies to school teachers from K-12 with out-of-pocket classroom expenditures.
If you're a homeowner, therefore, it's likely you're on delay. The IRS will let you prepare your tax returns -- you just can't file them. And along with the changes, the IRS is recommend that all taxpayers use the e-File system to ensure accurate tax returns and faster tax refunds. One way to e-File is to prepare your taxes online.
Companies like TurboTax will actually let you file your federal taxes online -- free.
Estimate Your 2010 Tax Refund Right Now
Another neat thing about income tax software is that it can estimate what your 2010 tax refund will be with remarkable precision. With just a few pieces of information (i.e. marital status; age; household income), the software reviews your basic deductions versus what you've paid the government already, and uses it to project your eventual refund.
Note that online software should not be considered a tax filing substitute, nor should a taxpayer spend or invest his projected estimate before it's paid by the U.S. treasury. However, when provided with reliable tax information, refund estimators are usually spot-on.
Use TaxCaster to estimate 2010 tax refunds. It's another free tax tool.
Contact The Mortgage Mark with any questions.
http://www.themortgagemark.com/
mwilkins@capitalfmc.com
Tuesday, January 18, 2011
Tuesday, January 11, 2011
Mortgage Fraud: Multi-Million Dollar Ponzi Scheme Mastermind Sentenced
Tuesday, January 11, 2011
Multi-Million Dollar Ponzi Scheme Mastermind Sentenced
William Arthur Sassman II, 42, Sacramento, California, who looted the life savings of dozens of investors to bankroll his own lavish lifestyle and finance his own investments, was sentenced to 18 years in prison.
Sassman convinced people who had painstakingly saved for their retirement that he could make a lot of money for them. Instead he used their money for his fine clothing, his expensive cars, his several homes and his own illegal investments.
Sassman appeared in Sacramento County Superior Court where he had previously entered a guilty plea on 13 felony counts of grand theft.
Judge Lloyd G. Connelly sentenced Sassman to prison and ordered him to pay more than $4.45 million in restitution to 48 victims. No funds have been found, however, and it is unlikely victims will receive repayment.
An investigation by agents of the Department of Justice revealed that Sassman, a licensed insurance agent, operated a Ponzi scheme starting about 10 years ago in which he repaid current investors with money from new investors.
Using a book he wrote, "Secrets of a Worry Free Retirement," Sassman convinced investors, many of whom were senior citizens, to shift their life savings to "high return" investments. These investments included foreclosed properties and real estate on Mare Island, Vallejo, California, and in other states, commercial property in El Dorado Hills, near Sacramento, California, the production of a laptop computer stand called the "Notefloat," which never sold, and annuity, stock and foreign currency investments.
Sassman actually invested little of the money and rarely paid the double to triple digit returns he promised. Instead, he spent investors' millions financing his lavish lifestyle. He charged more than $1 million on his American Express cards, spent $300,000 on automobiles, including two Ferraris, and spent more than $121,000 at Polo Ralph Lauren. Sassman possessed three invitation-only Centurion cards, which are black metal cards issued by American Express for high spenders. He also had an electronic card for collecting public assistance despite owning three homes and numerous cars.
The limited funds Sassman did invest were channeled into other illegal operations in which Sassman himself was victimized. Sassman failed to disclose to investors that he had invested more than $200,000 in a "Nigerian swindle" in 2000-2002. He also lost money in a "stock trading program" run by a group subsequently indicted in federal court in 2009 for running a Ponzi scheme and a European investment scam that promised a 200 percent profit in 45 days or 800 percent annually.
As Sassman's empire fell apart in September 2009, he sought bankruptcy for himself and his companies, but he continued to solicit funds from investors. When Sassman was arrested in November 2009, investigators discovered that in the two months before his arrest he had sent another $20,000 to a new "Nigerian swindle."
Since his arrest, Sassman has remained in custody with bail set at $2 million. But investigators discovered that he had family members gain access to stolen funds to support his family and put funds on his jail commissary account.
Sassman's victims include a Sacramento resident who invested more than $250,000 in one of Sassman's companies. Sassman promised her a seven percent annual return. Her money was combined with money from other investors for a total of more than $700,000. Of that money, Sassman spent approximately $400,000 on personal expenses, more than $50,000 went to Sassman's wife, and more than $34,000 was paid in returns to other investors. The victim lost $170,000 of her investment.
In January 2007, a Sacramento couple gave Sassman more than $80,000 that was supposed to be invested in real estate and interest-bearing accounts, but the entire amount was used to pay previous investors.
The case was prosecuted by the state Department of Justice. The investigation was conducted by the Department of Justice, with assistance from the Department of Insurance and the Department of Corporations.
http://www.themortgagemark.com/ mwilkins@capitalfmc.com
Multi-Million Dollar Ponzi Scheme Mastermind Sentenced
William Arthur Sassman II, 42, Sacramento, California, who looted the life savings of dozens of investors to bankroll his own lavish lifestyle and finance his own investments, was sentenced to 18 years in prison.
Sassman convinced people who had painstakingly saved for their retirement that he could make a lot of money for them. Instead he used their money for his fine clothing, his expensive cars, his several homes and his own illegal investments.
Sassman appeared in Sacramento County Superior Court where he had previously entered a guilty plea on 13 felony counts of grand theft.
Judge Lloyd G. Connelly sentenced Sassman to prison and ordered him to pay more than $4.45 million in restitution to 48 victims. No funds have been found, however, and it is unlikely victims will receive repayment.
An investigation by agents of the Department of Justice revealed that Sassman, a licensed insurance agent, operated a Ponzi scheme starting about 10 years ago in which he repaid current investors with money from new investors.
Using a book he wrote, "Secrets of a Worry Free Retirement," Sassman convinced investors, many of whom were senior citizens, to shift their life savings to "high return" investments. These investments included foreclosed properties and real estate on Mare Island, Vallejo, California, and in other states, commercial property in El Dorado Hills, near Sacramento, California, the production of a laptop computer stand called the "Notefloat," which never sold, and annuity, stock and foreign currency investments.
Sassman actually invested little of the money and rarely paid the double to triple digit returns he promised. Instead, he spent investors' millions financing his lavish lifestyle. He charged more than $1 million on his American Express cards, spent $300,000 on automobiles, including two Ferraris, and spent more than $121,000 at Polo Ralph Lauren. Sassman possessed three invitation-only Centurion cards, which are black metal cards issued by American Express for high spenders. He also had an electronic card for collecting public assistance despite owning three homes and numerous cars.
The limited funds Sassman did invest were channeled into other illegal operations in which Sassman himself was victimized. Sassman failed to disclose to investors that he had invested more than $200,000 in a "Nigerian swindle" in 2000-2002. He also lost money in a "stock trading program" run by a group subsequently indicted in federal court in 2009 for running a Ponzi scheme and a European investment scam that promised a 200 percent profit in 45 days or 800 percent annually.
As Sassman's empire fell apart in September 2009, he sought bankruptcy for himself and his companies, but he continued to solicit funds from investors. When Sassman was arrested in November 2009, investigators discovered that in the two months before his arrest he had sent another $20,000 to a new "Nigerian swindle."
Since his arrest, Sassman has remained in custody with bail set at $2 million. But investigators discovered that he had family members gain access to stolen funds to support his family and put funds on his jail commissary account.
Sassman's victims include a Sacramento resident who invested more than $250,000 in one of Sassman's companies. Sassman promised her a seven percent annual return. Her money was combined with money from other investors for a total of more than $700,000. Of that money, Sassman spent approximately $400,000 on personal expenses, more than $50,000 went to Sassman's wife, and more than $34,000 was paid in returns to other investors. The victim lost $170,000 of her investment.
In January 2007, a Sacramento couple gave Sassman more than $80,000 that was supposed to be invested in real estate and interest-bearing accounts, but the entire amount was used to pay previous investors.
The case was prosecuted by the state Department of Justice. The investigation was conducted by the Department of Justice, with assistance from the Department of Insurance and the Department of Corporations.
http://www.themortgagemark.com/ mwilkins@capitalfmc.com
Monday, January 3, 2011
Mortgage Interest Deduction: Understanding How it Works Today and the Proposed Changes
Recent talk about eliminating the mortgage interest tax deduction has made headlines and, given all of the proposed changes, has caused confusion for many. Below is an explanation of what the mortgage interest deduction is in its current form and the proposed changes being suggested by The National Commission on Fiscal Responsibility and Reform in an effort to reduce the national deficit.
How the mortgage interest tax deduction works today:
Currently the monthly interest paid on your mortgage is considered a tax deductible expense, meaning you can take the amount you paid in mortgage interest throughout the year and deduct it from your taxable income–but only if you itemize your taxes, something only about one-third of Americans do each year. This is not to be confused with a tax credit which reduces the amount of tax you pay. The first-time home buyer tax credit is an example of a tax credit–if without the tax credit you owed $10,000 in taxes in 2010 but were able to claim the full first time home buyer tax credit of $8,000 the amount of taxes you would owe would go down to $2,000.
Mortgage interest can only be deducted for your primary and secondary homes. Interest paid on third or fourth homes is not tax-deductible. The amount of mortgage interest paid can be found on your 1098 Mortgage Interest Statement from your bank. Should you decide to itemize your taxes for deductions rather than take the standard deduction you will be asked to provide your 1098 Mortgage Interest Statement to your tax preparer. According to Investopedia only taxpayers whose total itemized deductions are greater than the standard deduction will itemize their taxes. As a rule of thumb, if the amount of mortgage interest and points paid during 2010 exceeds the standard deduction ($5,700 for single taxpayers, $11,400 for married taxpayers filing jointly, $8,400 for head of household) you will likely benefit by itemizing your deductions.
As a side note, Primary Mortgage Insurance paid in 2010 is also fully tax deductible for taxpayers whose adjusted gross income (taxable income) falls below $100,000 and is partially deductible for those with taxable income between $100,000 and $109,000.
Proposed changes to the mortgage interest tax deduction:
The National Commission on Fiscal Responsibility and Reform is proposing a change to the current tax deduction that would modify what is eligible, not eliminate the deduction altogether. The proposal eliminates the tax deduction for secondary homes, homes with mortgages exceeding $500,000 and mortgage interest on home equity loans. The majority of American homeowners who have primary home mortgages of less than $500,000 would not directly feel the effect the impact of the proposed mortgage interest tax-deduction changes.
Arguments for and against proposed mortgage interest tax deduction modifications:
Proponents have come out in droves both for an against the proposed changes. According to a recent Los Angeles Times article, the National Association of Realtors is currently running ads, “warning that tampering with the deduction would hurt ‘hard-working American families.’ The ads point out that 65% of the taxpayers who took the deduction made less than $100,000.”
However, the article goes on to say,
What the group doesn’t say is that about 75% of the entire $85.5 billion that people saved in taxes from the mortgage interest deduction in 2008 went to individuals or couples making $100,000 or more, according to an analysis by the congressional Joint Committee on Taxation of the latest data available.
Based on the committee’s numbers, taxpayers who took the mortgage deduction saved, on average, $2,330 in 2008. But for those reporting incomes of $200,000 and more, the average savings were nearly triple that amount.
About half of all homeowners in the U.S. — and just a quarter of all taxpayers — benefit from the mortgage interest deduction at all. That’s because most people don’t have home loans or don’t pay enough in mortgage interest to take advantage of the benefit.
Here are a few good articles with expert commentary about the pros and cons of modifying the mortgage interest tax deduction from its current form:
Wall Street Journal: Homeowner Perks Under Fire
Los Angeles Times: Tax Deduction for Mortgage Interest Could be on the Chopping Block
AOL HousingWatch: Mortgage Interest Deduction: Do You Need It?
Contact The Mortgage Mark with any questions!!
http://www.themortgagemark.com/ mwilkins@capitalfmc.com
How the mortgage interest tax deduction works today:
Currently the monthly interest paid on your mortgage is considered a tax deductible expense, meaning you can take the amount you paid in mortgage interest throughout the year and deduct it from your taxable income–but only if you itemize your taxes, something only about one-third of Americans do each year. This is not to be confused with a tax credit which reduces the amount of tax you pay. The first-time home buyer tax credit is an example of a tax credit–if without the tax credit you owed $10,000 in taxes in 2010 but were able to claim the full first time home buyer tax credit of $8,000 the amount of taxes you would owe would go down to $2,000.
Mortgage interest can only be deducted for your primary and secondary homes. Interest paid on third or fourth homes is not tax-deductible. The amount of mortgage interest paid can be found on your 1098 Mortgage Interest Statement from your bank. Should you decide to itemize your taxes for deductions rather than take the standard deduction you will be asked to provide your 1098 Mortgage Interest Statement to your tax preparer. According to Investopedia only taxpayers whose total itemized deductions are greater than the standard deduction will itemize their taxes. As a rule of thumb, if the amount of mortgage interest and points paid during 2010 exceeds the standard deduction ($5,700 for single taxpayers, $11,400 for married taxpayers filing jointly, $8,400 for head of household) you will likely benefit by itemizing your deductions.
As a side note, Primary Mortgage Insurance paid in 2010 is also fully tax deductible for taxpayers whose adjusted gross income (taxable income) falls below $100,000 and is partially deductible for those with taxable income between $100,000 and $109,000.
Proposed changes to the mortgage interest tax deduction:
The National Commission on Fiscal Responsibility and Reform is proposing a change to the current tax deduction that would modify what is eligible, not eliminate the deduction altogether. The proposal eliminates the tax deduction for secondary homes, homes with mortgages exceeding $500,000 and mortgage interest on home equity loans. The majority of American homeowners who have primary home mortgages of less than $500,000 would not directly feel the effect the impact of the proposed mortgage interest tax-deduction changes.
Arguments for and against proposed mortgage interest tax deduction modifications:
Proponents have come out in droves both for an against the proposed changes. According to a recent Los Angeles Times article, the National Association of Realtors is currently running ads, “warning that tampering with the deduction would hurt ‘hard-working American families.’ The ads point out that 65% of the taxpayers who took the deduction made less than $100,000.”
However, the article goes on to say,
What the group doesn’t say is that about 75% of the entire $85.5 billion that people saved in taxes from the mortgage interest deduction in 2008 went to individuals or couples making $100,000 or more, according to an analysis by the congressional Joint Committee on Taxation of the latest data available.
Based on the committee’s numbers, taxpayers who took the mortgage deduction saved, on average, $2,330 in 2008. But for those reporting incomes of $200,000 and more, the average savings were nearly triple that amount.
About half of all homeowners in the U.S. — and just a quarter of all taxpayers — benefit from the mortgage interest deduction at all. That’s because most people don’t have home loans or don’t pay enough in mortgage interest to take advantage of the benefit.
Here are a few good articles with expert commentary about the pros and cons of modifying the mortgage interest tax deduction from its current form:
Wall Street Journal: Homeowner Perks Under Fire
Los Angeles Times: Tax Deduction for Mortgage Interest Could be on the Chopping Block
AOL HousingWatch: Mortgage Interest Deduction: Do You Need It?
Contact The Mortgage Mark with any questions!!
http://www.themortgagemark.com/ mwilkins@capitalfmc.com
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