Huddleston Tax Weekly

The IRS has announced the 2009 standard mileage rates used to calculate auto expenses for business, charitable, medical, and moving purposes.

Starting January 1, 2009, the standard mileage rates for cars will be:

• 55 cents per mile for business miles
• 24 cents per mile for medical or moving purposes
• 14 cents per mile for service of charitable organizations

As always, for business purposes, you have the option of calculating the actual cost of your vehicle usages rather than using the mileage rate.

If you are uisng your auto for business, medical, or charitable purposes then be sure to keep a log of miles driven so that your tax records will be correct.

If you have any questions on the mileage rates or about deducting your auto miles for business, medical, or charitable purposes please feel free to contact us.

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Have you recently realized that you made a mistake on a prior years tax return?  No need to worry, you can go ahead and file an amended return.  Usually the IRS will catch mistakes such as math errors or missing forms like W-2’s or 1099’s, but you should go ahead and file an amended return in the case of any of the following:

• A change in filing status
• A change in dependents
• A change in total income
• A change in deductions or credits

To amend a tax return you use for 1040X and fill in the appropriate year at the top of the form.  If you are amending more than one year, they must be done on separate forms.  You should indicate the changes in the columns on the 1040X and attached any forms or schedules that show the changes.

If you are filing to receive an additional refund, you should wait until after you have received the original refund before filing the amended return.  If you are filing an amended return that shows additional tax due, then send in the 1040X and additional payment as soon as possible to avoid penalties.

Generally you must file form 1040X within 3 years from the date you filed your original return or within two years from the date you paid the tax, whichever is later, in order to claim a refund.

If this all seems overwhelming, then you should consult your tax adivisor for help before filing your return.

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When you refinance your home you may be eligible to deduct some of the costs associated with your loans. 
One of these costs are “points”.  “Points” is used to describe some of the charges you incur to obtain your mortgage.  Taxpayers who itemize may be able to deduct the points paid as mortgage interest.  However, when points paid are only for a refinance then they must be deducted over the life of the loan.  There is an exception to this rule.  If the refinanced mortgage money was used to finance improvements to the home, then they may be fully deductible in the year the points were paid. 

The other closing costs paid when refinancing (i.e. appraisal fees, etc) are not deductible. 

If you are refinancing your home and need help with what is deductible then please contact us for additional help.  www.huddlestontax.com

When going to sell your home many people wonder if the profit they make off of the sale will be taxable or not.  The answer is sometimes yes and sometimes no.

Generally the profit you make off of selling your home is considered a capital gain and taxed at capital gains rates.  However, there are exceptions to this.  There is tax law that sometimes allows you to exclude a portion or even all of your gain making it non-taxable.

Indivduals may be able to exclude up to $250,000 of capital gains on their home sales ($500,000 for married filing joint).  This exclusion may be claimed each time you sell your main home but generally not more often then every two years.

To qualify, you must meet both the ownership and use tests.
• Ownership Test: During the 5-year period ending on the date of the sale, you must have owned the home for at least 2 years.
• Use Test: During the 5-year period ending on the date of the sale, you must have lived in the home as your main home at least 2 years.
If you and your spouse file a joint return and both meet the use test, you normally will be able to claim the exclusion for married couples even if only one of you meets the ownership test.

If you do not meet these tests you may still be able to exclude at least part of your capital gains, but the circumstances must be related to health problems, job reclation or other unforseen distasters.  If you think you may qualify to at least a partial exclusion but do not meet the above tests then it is best to consulting your tax advisor.

If you would like more information on home sale exclusions or need help figuring out your home sale gain then please contact us at john@huddlestontax.com or visit our website at www.huddlestontax.com.