Accounting & Taxes

In this section you will find a full list of questions and answers provided by our specialized staff.

1) How much do I need to pay in taxes when I sell my home? 

Currently, if you sold your main home, you may be able to exclude from your income any gains up to the limit of $250,000 for a single person and $500,000 for a joint return.  If you are able to exclude all your gains then you do not need to report the sale on your tax return.

2)  I work in my home part time.  Can I take the home office deduction?

If you run a business out of your home, you can often claim a deduction on rental or mortgage costs, as well as some depreciation for the portion of the home used for business.  You can also deduct some related costs such as utilities, insurance and remodeling.  However, a portion of your house must be completely dedicated for work and not for personal use.

3)  When is the best time to refinance?

It depends on how long it will take you to reach your breakeven point and the time horizon for you to stay in the house.  The breakeven point is the time it takes you to make up in monthly savings what you paid in fees.  To calculate your breakeven point divide the mortgage fees by the monthly savings. 
For example, let’s say you would save $200.00 per month by refinancing and the closing costs add up to $4,000.00.  In this scenario it will take 20 months to breakeven, so if you plan to stay for more than 20 months in the house then perhaps it is wise to refinance.

4)  What types of educational expenses are deductible?

It depends on the credit the taxpayer is eligible to take.  However, most educational expenses that are deductible are the amounts spent on tuition, supplies, laboratory fees, as well as corresponding courses, transportation and traveling expenses.  Also, schools give out 1098-T which will have information that is useful in preparing your tax return. 

5) What should I do if I made a mistake on my federal income tax return that I have already filed?

This depends on the type of mistake.  Many mathematical errors are caught in the processing of the tax return.  If you forgot to attach a required schedule the internal revenue service will contact you for the missing information.  However, if you did not report all of your income or did not claim a credit, then you are entitled to file an amended or corrected return using Form 1040X.