Taxes

How much do you value your leisure time? Preparing your own return using commercially available software comes with the cost of some of your leisure time. The amount of time increases with the complexity of your return. It shouldn't take too long to prepare a return for a family with all income reported on W-2's, a small investment portfolio, and itemized deductions related to home ownership.

Once you go outside these areas you have to factor in time to learn about the tax laws, regulations and reporting requirements. So the time to prepare the return increases and uses more of your leisure time. When the total value of your leisure time needed to prepare your own return exceeds the cost of hiring a professional to prepare your return it is time to hire the professional.

You are the one who has to decide how much your leisure time is worth.

Taxes are likely your largest expenditure, and yes you can prob do them yourself, but I feel better knowing that a professional does mine, I mean they know how to dot the i and cross the t, I dont mind spending a few hundred bucks and knowing I did everything I could to lessen my tax liabality, and I am talking about a professional CPA, not the h&r block guy in front of walmark

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Poodlebrain

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It shouldn't take too long to prepare a return for a family with all income reported on W-2's, a small investment portfolio, and itemized deductions related to home ownership.

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This is essentially my situation, so it looks like I can probably manage it myself.

Dumb question: now that I have a home, it's almost always likely that I will do itemized deductions now or?

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First, for a married couple, if you have no other Sch. A deductions (charit. donations, health care cost, etc.), then you would need to have at least $11,400 in interest payments for the year. Otherwise, you just use the standard deduction. This is part of what's known as the marriage penalty,

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Well, that sucks.

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Yes, you will most likely benefit from itemizing your deductions

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But not if they don't exceed the $11,400, right?

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But not if they don't exceed the $11,400, right?

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Together, they have to add up to $11,400.

Also, looking at Sch. A, you can see that some deduction are subject to certain limitations (e.g., misc. itemized). After applying these limitations all itemized deductions must be greater than $11,400 for it to be worth anything. Otherwise, just use the standard deduction.

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First, for a married couple, if you have no other Sch. A deductions (charit. donations, health care cost, etc.), then you would need to have at least $11,400

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If he itemizes, he'll also be able to deduct state, property and ad velorem taxes as well as a sales tax deduction.

If he's paying a note on, just a guess here, a $150K or more 30 year note, he'll exceed the standard deduction no problem.

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Yes, but I'm married too, so it doubles to $11,400. In that case, it's not that easy.

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A $200K 30 year loan at 5% is roughly $10K a year in interest. Deductions for state and property taxes are going to add up to a few grand more. Then you ahve other deductions like charitable contributions, ad velorem taxes, student loan interest, etc that may be available to you as well.

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If my next payment is due on 1/01/2010, I presume the mortgage interest rolls onto 2010, yes? Because right now I don't have $10K in interest - I haven't had the house for 1 full year though either, only about 9 months.

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Your loan servicer will send you a 1098 showing the amount of interest paid in 2009. If you only paid a partial year, you may be better with the standard deduction. Most online programs will walk you through itemizing and then you can tell which is better.

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So, you're saying I put BOTH my wife and I's state income taxes on itemized deductions as well as our property taxes?

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If you are filing jointly, yes.

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How do charitable contributions work when it's cash?

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My cash donations are pretty small so I just use cancelled checks and/or reciepts from the organization. I'm sure you need more documentation for larger amounts. Most of my donations are non-cash.

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Most of my donations are non-cash.

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You can claim up to $500 of non-cash charitable contributions without providing any sort of information to the IRS. Once you go above $500 you have to attach a Form 8283.