If you will purchase your first home before Nov 30 - you might qualify for the first time home buyer's credit.
However - most likely you will pay mortgage interest only one-two months - and this your itemize deduction still will be less than standard deduction - so most likely you will still use standard deduction on your 2009 tax return.
Your wages $54,000
your SS benefits $18,000 85% = $15,300 taxable amount
Total gross taxable income $69,300
Your standard deduction $7100 (including age adjustment $1400 assuming you are above 65)
personal exemption - $3650
Net taxable income - $58550
Tax liability - $10,850
Making Work Pay Credit - $150 (assuming you already received $250 from SSA)
Total tax liability - $10,700
minus whatever were withheld from your paycheck
Please be aware that if you do some energy efficient home improvement in December - you might claim additional credit - let me know if you need any help this matter.
Your first time home buyer's credit.- you either amend your 2008 tax return immediately after the purchase is completed, or
wait and file with your 2009 tax return.
For amended 2008 tax return - please expect the delay at least four months before you will get the refund.
Please also be aware that in additional to form 1040X -
you need to prepare the form 5405 - http://www.irs.gov/pub/irs-pdf/f5405.pdf
and attach a copy of the HUD-1 statement from your closing papers (the IRS required this document)
For 2010 - you might start itemize on your tax return - if your itemized amount will be greater than standard deduction. You will include into that
$6,000.00 in mortgage interest
real estate taxes
charitable contribution.
sales tax (Tennessee does not tax individual wage income - so you will deduct sales tax)
property tax (paid on your car, etc)
some other expenses
As your standard deduction in 2009 would be $7100 (including age adjustment $1400 assuming you are above 65) - in 2010 it likely be ~$7300
Let me know if you need any help.
Tax Preparer
Taxes, Immigration, Labor Relations
To clarify:
I am retiring not untill 2010 January.
I believe that I do qualify for the tax credit, since it is my permanent home and since I am a first time buyer.
That being said, will I actually get money back on my 2010 return, retiring as of first of 2010; am wondering how much approximately would I get back if any money with the $6,0000 mortgage interest as a factor and earnings of 18,000.00 or less.
I will be claiming the 8,000.00 credit on my 2009 return while still I am working and while the offer is good for the november 30th file date.
See instruction on the form 5405 - http://www.irs.gov/pub/irs-pdf/f5405.pdf
You are considered a first-time homebuyer if:
-- You purchased your main home located in the United States after April 8, 2008, and before December 1, 2009.
-- You (and your spouse if married) did not own any other main home during the 3-year period ending on the date of purchase.
As you would qualify and will claim the credit on 2009 tax return.
But where you get $6000 in mortgage interest? - will you pay it in 2009 or in 2010?
I will estimate your refund for 2009, but I need to know
what is your income in 2009?
do you receive any SS benefits in 2009? IF yes - what is the amount?
what is your age on the last day of 2009?
what is the amount of real estate tax on the property you will purchase?
I am 62. My earnings for 2009 are $53,405.00. I am not yet retired, not untill 2010.
I will have the 8,000.00 tax credit refund since my house purchase is on October 30 of 2009. I have a college loan interest of $995.00 and one month 550.00 of home interest. I do not know the sales tax amount inolved with the house, just estimate please, the house is $105,000.00
My primary need to know is if I will get money back, cash to me and approximately how much with the social security and lesser earnings projected for 2010 of $18,000.00, social security benefit. I will have 6,000.00 dollars in mortgage interest paid in 2010 to consider. I will still be under age 65 in 2010. Nothing else is involved. I will be debt free except for the home mortgage in 2010.
Ok - here our raw estimations for 2009
Your expected refund is $1447 plus all income tax withholding from your paychecks.
You most likely will use standard deduction as your itemized deduction in 2009 will be less than standard.
For 2010 - if your only income will be social security - and there will not be any other income - none of your income will be taxable.
As per your 2009 scenario, did you interpret the 8,000.00 tax refund for buying a house before nov 30th into the scenario or would I receive this, full amount in addition to the estimated 1,447.00?
Fpr 2010 if I cash in my 401 k is this considered income and taxable. You did not tell me how my 2010 6,000.00 in interest on my home would figure into the scenario, did you?
Calculations are based on assumption that you will claim your $8000 first time home buyer's credit on 2009 tax return - and yes - it is included in the determination of your refund.
However - I did not include the amount of your withholding from your wages - that amount will be reported on the form W2 box 2. You may estimate that amount looking at your paycheck stub. That amount should be added to your tax refund.
For example - if your withholding from wages in 2009 are $5000 - your total refund will be $1447 + $5000 = $6447
Your $6000 in interest paid in 2010 will be used if you itemize your deduction in 2010.
However that deduction will be used only if you will have taxable income.
If your only income in 2010 will be social security benefits - you will not have any taxable income - and you tax liability will be zero - in this case you will not be able to use any deductions.
I am really confused now; I thought I would get $8,000.00 back on my 2009 return regardless. There are two Obama incentives, the one a tax credit and the other actually a rebate, am I wrong about this? I am taking advantage of the later one, the first being a tax credit, 2008 and the later one a kick back, or so I thought is a 2009 incentive? Tell me otherwise if I am in the darkm and speak simply to me. I do not need to know about my standard deductions. I have and have had a standard return for several years and can easily refer to; it is the nuances to which I refer.
Is social security taxed? you said no
Will I get $8,000.00 back or not?
For 2009 - can you tell be what is your expected federal income tax withholding?
I will provide exact estimation of your 2009 refund.
6,181.00 / Federal
3,868.80/ FICA
everything else is standard, single person, age 62
Other than:
student loan of $950.0(close to)
and $550 in one month of house interest
sales tax on a 105,000.00 house to estimate; I do not know the rate in Tennessee for this kind of purchase or have in hand; although it si probably on my good faith estimate at home.
Let talk about 2009 tax return only to avoid confusions.
Without a first-time homebuyer' credit - your tax estimation will be:
Wages - $53,405
Less student loan interest deduction - $955
Adjusted Gross income - $52410
Standard deduction - $5700
Personal exemption - $3650
Taxable income - $43060
Regular tax - $6953
Less - Making Work Pay credit - $400
Less - Federal income tax withheld - $6,181.
Your estimated tax liability - $372 - that what you will pay with your tax return.
Now - you will purchase a home and will claim your first-time homebuyer' credit
Less - first-time homebuyer' credit $8000
Your estimated tax refund is $7628 - that what you will receive with your tax return.
Please take your time review and compare both estimations.
There is no sales tax on purchase of real estate.
Please refer to your estimated tax returns answer, good details, thanks;
But a possible caviat: I have withdrawn in 2009, as of last week ,15,900.00 for my house downpayment; monies came from my 401k employer based program.
how will the retirememnt fund withdraw, affect or will it not affect my 2009 income or will it? How will it affect my tax credit for purchasing a home. I trust you have the response you last made for your reference.
If the distribution is taking in 2009 - even on the last day - it should be included into your 2009 taxable income.
I am not sure what tax credit for purchasing a home do you mean? - you mentioned above that you do not qualify for the first time home buyer's credit. Do you mean any different credit?
Sorry for confusion - yes - you do qualify - I overlooked the information above...
If the distribution is taking in 2009 - even on the last day - it should be included into your 2009 taxable income - as a result - you might be pushed into higher tax brackets.
The distribution is your ordinary income regardless how it will be used.
As a side effect - additional income will push your current AGI - $52410 - up and you should consider that you are allowed the full amount of the credit if your modified adjusted gross income (MAGI) is $75,000 or less.
Thank you I will use you again.