How to DIY Your Taxes — and Not Miss a Single Deduction

Tips on choosing tax preparation software to help get all the homeowner benefits.

Ready or not, the tax man’s coming. Filing your taxes yourself may not be your idea of a fun night at home, but even so, it doesn’t really have to be that bad. Yes, even if you own a home. Even if you itemize your deductions. Even if you’re scared of making a mistake.

We turned to the tax pros and nailed down their top tips to make DIY tax filing as easy and painless as possible — as well as how to ensure you don’t miss any possible deductions. Here’s what they said:

Pick the Right Software

Unless you qualify for a free version (more about this below), software prices are all over the place. Still, you get what you pay for. TurboTax is pricey at almost $60 for the Deluxe version, but both our tax experts agree: If you’re going the DIY route, it’s their favorite option.

“It’s user-friendly,” says Cathy Derus, founder of Brightwater Accounting, who, despite being a CPA, admits she’s used the program herself in the past. “It offers an online questionnaire. Then, it walks you through exactly what you need to do.” That questionnaire does a good job of helping you identify possible deductions.

But it’s not fail-safe, she added. It’s only as good as the information you feed into it.

To really make sure you’re aware of all possible deductions, get a copy of Form 1040, Schedule A, (and Schedule C if you’re a sole proprietor for your own business), says Derus. Then, “scan the forms and take note of any items you think you might be eligible to take.”

If you’re a homeowner, here are some examples of deductions you can take:

Mortgage interest
Property taxes
Some costs of buying a new home
Some costs of selling a home
For a full list of your possible homeowner deductions, go here.

Free Software Can Be Ok, Too

If your adjusted gross income is below a certain threshold — typically $62,000 — you may qualify to use one of about a dozen free software options. TurboTax has a free option, but its income threshold is lower at $31,000. H&R Block, Jackson Hewitt, and TaxACT also have free versions.

Some companies also impose other restrictions, such as age and state of residence, to qualify for a free version. That’s because for some firms, the free offering is a way to find clients who might be willing to pay for other services.

Watch for extra costs:Some companies will file your federal return for free, but then charge you for the state return, to e-file, or ask questions of a live person.

Filing for an Extension Can Be a Smart Thing to Do

If you find yourself butting up against the tax filing deadline, you can always request an extension, “so you’re not stressed out,” says Derus.

Most people don’t fully understand how extensions work, and often make mistakes that cost a bundle. Here’s what you need to know:

How to file a tax extension:

File an extension anytime before or on April 15. You’ll avoid the late filing penalty, which is a whopping 5% of your outstanding balance, due for every month you’ve failed to file.
If you owe money, pay as much as you can by April 15 to avoid the late payment penalty of 0.05% interest. (A whole lot less than the late filing penalty, though!)
Make arrangements to complete your tax filing by the October 15 deadline to avoid adding extra interest payments.
Get the Benefits of E-Filing

You’ve probably already been e-filing your taxes, but are you aware of the benefits?

Why it’s better to e-file:

24 hours after you e-file, you can start checking on your return via the IRS’s “Where’s My Refund” online tool or IRS2Go app.
You’ll get any refund due to you faster.
You’re also more likely to know if you filed your forms correctly, avoiding a scary encounter with the tax man. Because if you e-file, you’ve got to use software. And these programs “run a check for questions that need to be answered, numbers that don’t add up, and missing Social Security numbers,” says Tai Stewart, accountant and owner of Saidia Financial Solutions in Houston. Those mistakes tend to flag your return for a close-up review.

You’ll also wait up to six weeks for your return if you use snail mail.

So, what are you waiting for? “Fill a pot of coffee, and get to work,” encourages Derus.

 

By: Alaina Tweddale

The 7 Most-Needed Repair Tips Every Homeowner Should Know

Relax. Here’s how to make short work of every common repair annoyance.

These are the 7 most-needed repair tips every homeowner should know.

1. Fix a Leaky Toilet

Running toilets not only rob sleep, they waste water and jack up your bill. Here’s how to change a flapper — the usual suspect:

    1. Identify the correct flapper using model number of toilet.
    2. Turn off water valve (clockwise).
    3. Flush toilet to drain.
    4. Remove old flapper.
    5. Clip chain to lever.
    6. Attach new flapper to mount pegs and check chain length.
    7. Remove and adjust length to be allow about 1-3 links of slack, if needed. Reattach.
    8. Turn water valve back on (counterclockwise).
    9. Test and you’re good to go.

 

2. Repair Drywall Holes

The hardest part of drywall repair is making the patch flush with the existing wall. A “pumpkin patch” is an easy repair that cuts down on sanding.

3. Adjust Cabinet Doors

Changes in humidity can make cabinet doors rub, refuse to close, or just look cockeyed. Adjusting them is easy and generally requires only a screwdriver.

4. Open a Stuck Window

Windows stick when paint, dust, or moisture builds. Use a utility knife (or a pizza cutter) to remove old paint. Be careful not to gouge the wood sash. If high humidity is making windows hard to move, run a humidifier that sucks moisture out of air.

5. Stop a Leaking Faucet

A dripping faucet can waste 5 gallons of water per day. If you can’t replace the faulty part immediately, tie a string around the faucet and let it fall into the drain: Dripping water will silently flow down the string.

6. Silence Door Squeaks

Take the squeak out of doors by lubricating top and bottom hinges with a little WD-40 or white lithium grease. If you don’t have any on hand, olive oil is a quick but temporary fix.

7. Turn Off the Main Water Line

Don’t wait until water gushes into your house to search for the main water line. When things are calm and dry, locate and practice turning it on and off.

Written by Lisa Kaplan Gordon / Houselogic.com

Solar Christmas Lights: Should You Make the Switch?

LED vs solar-powered Christmas house lights

 

Solar Christmas lights don’t cost anything to operate, but are they better than plug-in LED strings?

In the last few years, energy-efficient LED holiday lights have largely replaced more wattage-thirsty incandescent strings, resulting in significant savings — LED lights use 50% less energy than their incandescent predecessors, and they last up to 10 times longer as well.

Now there’s a newish kid in the string-light neighborhood: LED solar Christmas lights promise grid-free festive lighting.

Powering Up Solar Christmas Lights

A string of solar Christmas lights uses a small solar panel for power; there are no extension cords that must be plugged into outlets. The panel — about the size of a hockey puck — powers rechargeable batteries that illuminate a 25- to 100-bulb string of LED lights.

Panels come with small stakes so you can put them in the ground, where they can take advantage of the sun. A fully-charged string of lights should glow for six to eight hours after the sun goes down.

Solar Lights vs. LED Plug-In Costs

Pricing for solar-powered and plug-in LED holiday lights runs neck and neck. Compare purchase prices:

  • A 100-light string of miniature solar-powered LED lights costs about $10 and up.
  • A 100-light string of miniature plug-in LED lights costs about $10 and up.

Compare costs to operate:

  • Operating a string of plug-in LED holiday lights for 300 hours — more than enough time for an entire holiday season — costs about 24 cents, using an average energy cost of 12 cents per kilowatt hour (kWh).
  • Solar-powered Christmas lights, of course, don’t cost anything to operate. That means you’re saving 24 cents per year in energy costs.

Advantages of Solar Lights

  • No extension cords
  • No need for exterior electrical outlets
  • Withstand cold temperatures and precipitation
  • Zero cost to operate
  • Light output comparable to plug-in lighting
  • Green option

Disadvantages of Solar Christmas Lights

  • May not operate under cloudy skies
  • Unproven longevity (too new on the market for results)

Article by Alyson McNutt English for HouseLogic | REALTOR

Want to Refinance Your Mortgage But You’re Being Turned Down?

Can HARP help you refinance your mortgage?

Especially with the current record-low interest rates, many homeowners would like to refinance their mortgage.

Are you having difficulties? The federal program HARP might be able to help you. Here’s how it works.

Is your mortgage rate above today’s rates?

Is your house worth less than your current mortgage amount?

Are you unable to refinance into a lower-rate mortgage or convert your adjustable-rate mortgage to a fixed-rate mortgage?

Then the federal Home Affordable Refinance Program (HARP) is an option you should explore.

HARP is one of two components of the federal Making Home Affordable Program for struggling homeowners. Its counterpart, the Home Affordable Modification Program (HAMP), offers loan modifications if you’re behind on your payments or need help exiting gracefully if you can no longer afford your home.

HARP, on the other hand, helps you refinance your home with a brand new mortgage.

What Are the Benefits of HARP?

Your savings from refinancing using HARP could be substantial. The White House says the typical homeowner using HARP could reduce their mortgage payments by about $2,500 a year. Like any refinance transaction, HARP loans come with fees, so you’ll have to weigh the costs and benefits for your specific situation.

The good news is that HARP’s fees are less than the fees for typical refinances. For instance, you won’t have to pay for a full appraisal if the lender can get a reliable automated appraisal for your home. And Fannie and Freddie will waive for borrowers some fees they usually charge lenders (which lenders would normally pass on to you).

What Are the Qualifications?

Your mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
Your current lender had to sell your mortgage to Fannie Mae or Freddie Mac before June 1, 2009. Check with your lender to make sure that happened.
This must be your first HARP refinance. You only get one Home Affordable refinance, so if you’ve used the program before, you can’t use it again (although there’s a loophole for those with a Fannie Mae loan refinanced between March and May of 2009).
You need the right balance between what you owe and your home’s value. The minimum is that you owe 80% of your home’s value (for example, owing $80,000 on your $100,000 home). If you owe less than 80%, you can’t use HARP. If you owe up to 105% (say your home is worth $100,000 and you owe $105,000), you can refinance into an adjustable-rate mortgage. If you owe above 105%, you have to go with a fixed-rate mortgage. There’s no cap on how much you can owe above what your home is worth.
If you’ve paid your mortgage late even once during the past six months, you can’t use HARP, but if you had a late payment between 7 and 12 months ago, you’re fine.
If you can meet those criteria, you have until Dec. 31, 2015, to apply for a HARP refinance through either your current lender or a new lender.

Should You Apply?

HARP makes sense if you owe more than your house is worth, which is preventing you from refinancing, according to Bob Walters, chief economist at Quicken Loans. You’ll still pay full-market rates for a HARP refinance, not a discounted rate or payment that you might get with a loan modification.

As a rule of thumb, for fixed-rate mortgages, you’ll want your new rate to be at least a half-point better than your old one.

Lowering your interest can pay off immediately. Let’s say you took out a 30-year, fixed-rate mortgage at 6.5% for $176,800 at a monthly payment of $1,117.50 five years ago.

Today, you’d still owe $168,065. If you refinance that balance into a new 30-year loan at 4.5%, your monthly payment would drop to $851.56, saving you about $266 a month. Or, you could refinance into a 15-year fixed-rate loan, pay about $168 a month more, and pay your loan off about 10 years earlier.

HARP might also make sense if you can convert an adjustable-rate mortgage to a fixed-rate mortgage. Even if an ARM’s monthly payment is low now, it’ll go up if rates rise.

When applying for HARP, you need paperwork just like any other mortgage application:

  • Pay stubs
  • Tax returns
  • Mortgage statements
  • Account balances
  • Debt totals (for credit cards, student loans, car loans, and such)
  • Details about any second mortgages or home equity lines of credit

Pay attention to the fees associated with the refinancing, which the lender must disclose up front, and ask if those costs can be rolled into the new loan if you’re strapped for cash.

Tips to Make the Process Go Smoothly

To keep the process moving, ask your lender for a list of the documents it will need. Give yourself two weeks to collect everything.

If possible, submit the entire packet together via certified mail. Sending in documents piecemeal could result in lost paperwork and your loan application falling to the bottom of the pile, says Nicole Hall, editor of LendingTree.com. Keep detailed records of any phone calls you make, and dates you mail or fax correspondences.

There are companies that will offer to take care of the paperwork for a fee, but you don’t need to pay. You can access free help through a housing counselor approved by the U.S. Department of Housing and Urban Development. Counselors will help you understand the Making Home Affordable program and aid in gathering the documents needed for your loan servicer.

Don’t qualify for HARP? Then maybe its sister program, HAMP, is for you.

By: Donna Fuscaldo


Need help? Give me, Lucy Garber a call at (310) 293-4866.  I can refer you to some great mortgage brokers I’ve worked with over the years.

5 Ways You Didn’t Know You Could Save for a Down Payment

How can I come up with the down payment to buy a house?

 

One of the biggest misconceptions of home buying? The 20% down payment. Here’s how to buy with a lot less down.

Buying your first home conjures up all kinds of warm and fuzzy emotions: pride, joy, contentment. But before you get to the good stuff, you’ve got to cobble together a down payment, a daunting sum if you follow the textbook advice to squirrel away 20% of a home’s cost.

Here are five creative ways to build your down-payment nest egg faster than you may have ever imagined.

1. Crowdsource Your Dream Home

You may have heard of people using sites like Kickstarter to fund creative projects like short films and concert tours. Well, who says you can’t crowdsource your first home? Forget the traditional registry, the fine china, and the 16-speed blender. Use sites like Feather the Nest and Hatch My House to raise your down payment. Hatch My House says it’s helped Americans raise more than $2 million for down payments.

2. Ask the Seller to Help (Really!)

When sellers want to a get a deal done quickly, they might be willing to assist buyers with the closing costs. Fewer closing costs = more money you can apply toward your deposit.

“They’re called seller concessions,” says Ray Rodriguez, regional mortgage sales manager for the New York metro area at TD Bank. Talk with your real estate agent. She might help you negotiate for something like 2% of the overall sales price in concessions to help with the closing costs.

There are limits on concessions depending on the type of mortgage you get. For FHA mortgages, the cap is 6% of the sale price. For Fannie Mae-guaranteed loans, the caps vary between 3% and 9%, depending on the ratio between how much you put down and the amount you finance. Individual banks have varying caps on concessions.

No matter where they net out, concessions must be part of the purchase contract.

3. Look into Government Options

The U.S. Department of Housing and Urban Development, or HUD, offers a number of homeownership programs, including assistance with down payment and closing costs. These are typically available for people who meet particular income or location requirements. HUD has a list of links by state that direct you to the appropriate page for information about your state.

HUD offers help based on profession as well. If you’re a law enforcement officer, firefighter, teacher, or EMT, you may be eligible under its Good Neighbor Next Door Sales Program for a 50% discount on a house’s HUD-appraised value in “revitalization areas.” Those areas are designated by Congress for homeownership opportunities. And if you qualify for an FHA-insured mortgage under this program, the down payment is only $100; you can even finance the closing costs.

For veterans, the VA will guarantee part of a home loan through commercial lenders. Often, there’s no down payment or private mortgage insurance required, and the program helps borrowers secure a competitive interest rate.

Some cities also offer homeownership help. “The city of Hartford has the HouseHartford Program that gives down payment assistance and closing cost assistance,” says Matthew Carbray, a certified financial planner with Ridgeline Financial Partners and Carbray Staunton Financial Planners in Avon, Conn. The program partners with lenders, real estate attorneys, and homebuyer counseling agencies and has helped 1,200 low-income families.

4. Check with Your Employer

Employer Assisted Housing (EAH) programs help connect low- to moderate-income workers with down payment assistance through their employer. In Pennsylvania, if you work for a participating EAH employer, you can apply for a loan of up to $8,000 for down payment and closing cost assistance. The loan is interest-free and borrowers have 10 years to pay it back.

Washington University in St. Louis offers forgivable loans to qualified employees who want to purchase housing in specific city neighborhoods. University employees receive the lesser of 5% of the purchase price or $6,000 toward down payment or closing costs.

Ask the human resources or benefits personnel at your employer if the company is part of an EAH program.

5. Take Advantage of Special Lender Programs

Finally, many lenders offer programs to help people buy a home with a small down payment. “I would say that the biggest misconception [of homebuying] is that you need 20% for the down payment of a house,” says Rodriguez. “There are a lot of programs out there that need a total of 3% or 3.5% down.”

FHA mortgages, for example, can require as little as 3.5%. But bear in mind that there are both upfront and monthly mortgage insurance payments. “The mortgage insurance could add another $300 to your monthly mortgage payment,” Rodriguez says.

Some lender programs go even further. TD Bank, for example, offers a 3% down payment with no mortgage insurance program, and other banks may have similar offerings. “Check with your regional bank,” Rodriguez says. “Maybe they have their own first-time buyer program.”

Not so daunting after all, is it? There’s actually a lot of help available to many first-time buyers who want to achieve their homeownership dreams. All you need to do is a little research — and start peeking at those home listings!

By: Erik Sherman | Houselogic


With over 25 years of experience helping folks just like you to buy and sell homes in the Los Angeles South Bay, please give me, Lucy Garber, a call at (310) 293-4866.  Once I understand your specific circumstances, I’ll can suggest some ideas that may help you get into your first home.