☀️ Hello 🌞 June! ☀️
We are so happy to see your radiant face, bringing us the start of summer. Some brightness and warmth and a sunny attitude are definitely what we need to fully recover from tax season, even one that wasn't that bad.
June 1: Summer conjures dreams of lazy beach days. But for full-time coastal residents, June is less welcome. Today is the start of the Atlantic/Gulf of Mexico hurricane season. While there's a low pressure in the Eastern Gulf, at least we made it to opening day without an official system forming. That gives us time to prepare for hurricane season, a chance some folks got recently thanks to special sales tax holidays.
Uncle Sam's official forecasters at the National Oceanic and Atmospheric Administration (NOAA) Climate Prediction Center expect 2023 to bring 12 to 17 named storms, with five to nine possibly becoming hurricanes. As many as four of those storms could reach major status, which is category 3, 4 or 5 with winds of 111 mph or higher. Regardless of the count, it only takes one to wreak havoc. The countdown clock below can help you keep track of how many more days you have to worry about tracking any size or type of tropical storms.
You also might want to check out the ol' blog's special Storm Warnings.
These multi-page collections of posts offer tax advice on preparing for, recovering from and helping those who sustain damages from the many ways that that weather goes wild. That includes claiming uninsured losses from a major natural disaster as an itemized tax deduction.
June 5: With school out, working parents need to make child care arrangements. Consider day camps. Not only do they offer some supervision of your kiddos while you're at the office, the activities' costs also count toward claiming the child and dependent care credit.
June 12: Do you work as a server at a restaurant or at any other establishment where gratuities from customers are part of your compensation? I hope you got lots of financial thanks for doing your job well, but don't forget that those tips are taxable income.
Whether you're dining in or, still COVID leery and getting food delivered to your home, if a tip isn't included on your restaurant or delivery bill, click the image above to calculate how much to tip the person who brought it to you.
And you, as the server or delivery person, must account for those tips. If you got at least $20 in gratuities in May, you must report the amount by today (it's usually the 10th, but since that was Saturday, it moves to the next business day) by using Form 4070
to let your employer the total of the tips you took in last month. June 14:
Happy Flag Day! It's not a day-off-work federal holiday, but Flag Day
has been an official day to celebrate the Star-Spangled Banner since 1949
. If you need to buy a U.S. flag to fly today, you also might get a tax break. Several states exempt the national symbol from sales tax
. Check with your state's tax department
to see if you can save on your patriotic display. June 15:
It's Tax Day, this time for U.S. citizens or resident aliens living and working abroad
, as well as military personnel stationed outside the United States.
This mid-June day also is the deadline for the second estimated tax
payment for the 2023 tax year. June 18: Happy Father's Day
Dad might not say so, but he appreciates being recognized, so take time today to let him know you care. And if your father is getting on up in years, take the time when you visit to make sure he doesn't need some added help from you
. If you provide Pop a little, or even a lot of assistance, there's a chance you could get some help from a couple of tax credits
. June 19:
. This date marks when Texans finally received word that all slaves were free. And although it is our newest federal holiday, it is the oldest nationally celebrated commemoration of the ending of slavery in the United States. June 21:
It's official at 10:58 a.m. Eastern Time. Summer
is here, arriving on this longest day of the year.
Many charitable groups help people cope with the heat. If you itemize, your gift to such IRS-qualified nonprofits
could be tax deductible on next year's tax return. June 26:
If you missed spring cleaning, summer's also a good time to determine what you can do without. If that includes clothing or household items, you also can donate those and claim the fair market value
of the items. June 30:
If you got an extension to file back in April, or by June 15 if you're a taxpayer living overseas, remember that Free File
, the online preparation and electronic filing web page for eligible taxpayers created by the IRS' partnership with the Free File Alliance, is still operational.
You can prepare and e-file as its name says at no cost if your adjusted gross income (AGI) is $73,000 or less, regardless of your filing status
. You should be able to find a software that works for you from the seven tax prep companies
that are participating. Small Business Tax Calendar:
Important filing, deposit and record keeping dates
throughout the year that your company needs to know. You can get more tax calendar information at the IRS' online calendar page
and view the full year's important business and individual tax dates in IRS Pub. 509
Penny, this is not as common, but it appears that negative points also could be deductible. A borrower receiving negative points is analogous to a corporation receiving a bond premium. Corporations issue bonds at a premium because the bonds pay a higher interest rate than the market demands for a bond with the same characteristics (risk, duration, features, etc.). The bond premium represents a reduction of interest expense that is amortized over the life of the loan (IRC §171 and IRS Reg. 1.171-2). Therefore, amortizing negative points over the life of the mortgage is consistent with corporate treatment of a bond premium. That is, the amortization reduces the interest deduction on the home loan. Furthermore, amortizing negative points over the life of the loan is consistent with the general rule for tax treatment of positive points. However, I suggest you talk with a tax pro who specializes in real estate transactions.
Note also that there is a school of thought that if the negative points are all used to cover closing costs, any actual receipt of the negative points as cash could mean that the recipient of the points would be liable for income tax on that amount. Again, check with a tax pro.
thanks for reading and good luck on your refi.
Posted by: skbell1 | Thursday, August 23, 2012 at 07:10 PM
We are also looking at refinancing. What happens when there are negative points involved, which is happening on ours?
Posted by: Penny J Leisch | Thursday, August 23, 2012 at 11:31 AM
Yes, D, you do ... unless.
First to the "yes" part. The IRS says you can deduct any remaining balance of the points in the year the mortgage ends. That termination could be by prepayment, refinancing or, let's hope not, foreclosure. Say, for example, our hypothetical refinancer got his loan three years ago.
Now to the "unless" portion. When the second second refinancing is with the same lender, the IRS says you cannot immediately deduct the remaining balance of your first refi's points. Instead, those points you're amortizing from the first refi are added to your new refinance amount. You then continue to deduct them, and any additional points you may have paid for the second refi, for the life of your new loan.
Posted by: skbell1 | Wednesday, August 22, 2012 at 06:37 PM
So if you are deducting $100/year and then refinance in the 2nd year, do you take the rest of $1300 all at once in that last year?
Posted by: D | Wednesday, August 22, 2012 at 05:34 PM