Taxes

When it comes to property taxes, it's not just you, me and a certain Motown star that have  issues. 

Politicians do, too.

The new chair of the House Ways and Means Committee, Michigan Democrat Sandy Levin, last week repaid a Maryland property tax credit that he had erroneously received from Montgomery County.

Here’s something I’ll bet you don’t know -- all your charitable contributions are not deductible.

Unless you itemize your deductions, you get no tax benefit from charitable contributions. You did “good,” and you feel better. But, your taxes are unchanged.

Even if you do itemize, you get no tax benefit unless the contribution is made to an IRS- recognized charity. See Publication 78 for a cumulative list of qualified organizations.

Only our mendicant mandarins of madness in Congress could use the Tax Code to define insurance premiums as interest. But, I’m not one to challenge any construction that reduces my taxes.

I’m talking about mortgage insurance premiums (MIP). When you borrow money to buy a house, your lender is going to want you to have significant skin in the game. If you’re borrowing more than 80% of the value of the property, the mortgage company has an increased risk. To cover that increased risk, the lender will normally require you to purchase private mortgage insurance (PMI).

This news article comes from James R. Hagerty at partner site The Wall Street Journal:

The latest effort to scale back some tax deductions on mortgage interest, one of the nation's most-enduring tax breaks, is finding little support in Congress.

President Barack Obama's latest budget proposal, released in February, includes a provision that would shrink deductions for mortgage interest, real-estate taxes, charitable contributions and other items for married couples with annual incomes of more than $250,000, or individual filers earning more than $200,000. Under the proposal, such taxpayers would save 28 cents of tax liability for every $1 of mortgage interest or other eligible expenses, down from 35 cents now.

The IRS says you can’t depreciate land. Here’s how to do it….better.

Depreciation is the recovery of your cost from the purchase of an asset with a useful life of more than one year. If an asset, say office supplies, is expected to be used up within a year, you deduct the cost as an expense. But another asset, say a building, clearly has a useful life of many years. So, using prescribed IRS guidelines, you recover your cost by deducting a percentage of that cost over many years, technically the useful life.

The Tax Code doesn’t allow you to recover the cost of land. That’s because land has an unlimited useful life.

But, there’s another way to recover that cost.

Say you bought a rental property for $120,000 with $20,000 allocated to the land. The rules say you depreciate the building over 27.5 years (39 years for non-residential rental) and get no deduction for the land.

But, we don’t care about no stinkin’ rules!

By Joe Mont, TheStreet

Wal-Mart (WMT), Target (TGT), Best Buy (BBY) and other retailers shouldn't expect a bump in spending during tax-return season as Americans keep paying down debt.

Among those expecting a refund, 44% will use it to reduce debt, according to the National Retail Federation's 2010 Tax Returns Consumer Intentions and Actions Survey conducted by BIGresearch, a consumer market-intelligence firm. In 2009, 48% said they would use the money to lower debt. Sixty-six percent of tax payers are expecting a refund, down from 68.4% last year.

For those no longer in scrimp-and-save mode, 12.5% of those getting a refund plan a major purchase, up from 11% last year. Ten percent said they plan to use their refund for a vacation. Tax refunds are potentially massive sources of income for retailers. Last year, 238 million tax refunds were distributed, or about $426 billion.

Some high, hard pitches are being thrown in connection with a couple of Major League Baseball teams, but they're not part of spring training drills.

The nastiest knuckleball so far has been fired by Jamie McCourt.

The estranged wife of Los Angeles Dodgers owner Frank McCourt (she contends California's community property law makes her co-owner, a claim the court will decide) has revealed how she says the couple avoided taxes on millions.

How would you like a $100,000 interest-free loan from Social Security?

Even better -- you can elect whether to pay it back.

Here’s the deal. And the best part is that there’s really no downside.