Debt Free

For you stragglers, the tax deadline is just about to move to the “came and went” category. If you haven’t filed your taxes yet, here are a few last minute things you should check to keep Uncle Sam’s mouthful as low cal as possible. Maybe you can use these to inch yourself a little closer to being debt free.

Mortgage Interest Points -
Remember that any points you paid to lower your mortgage interest rate are deductible, but only in the year you actually paid them. Ditto points paid for a home improvement loan.

Student Loan Interest –
There’s no reason you should not be deducting interest paid on student loans as well. Interest paid on the first 60 months for qualified student loans made after 1997. The 60 month clock starts ticking the month your loan enters mandatory payment status. If you stop making those loan payments for reason, save forbearance or deferment, it doesn’t matter, that clock keeps on a’ tickin’. The deduction applies for those of you making an adjusted modified gross income of less than $65,000 (filing singly) or $135,000 (jointly). I guess the Feds feel like you physicians out there don’t really need the deduction to help with the interest on your huge student loans.

One more thing; student loan interest paid by a third party is now deductible. If you’re the party legally obligated to make the payments, you can claim the deduction, even if the interest payments were actually made by someone else. No, you both can’t claim them.

Self employment taxes -
Those of you working for yourself can claim half of your self-employment tax as a deduction. The income can include S-corp wages, net profits from schedules C or F, or guaranteed partnership payments. There’s no need to itemize in order to claim this deduction.

Education tax credits -
You can claim one of two available education tax credits; either the Hope Credit, or the Lifetime Learning Credit. These credits are available for you, a spouse or an eligible dependent. These are figured using your "qualified tuition and related expenses" for each student and the total of your modified adjusted gross income (modified AGI). The Hope Credit is for those full time students not having been convicted of a felony that are enrolled in the first two years of a degree program. (I’m serious, really)

The Lifetime Learning Credit is for those enrolled in a program to acquire or improve job skills, weather it’s a in a collegiate setting or at a trade school. Collegiate programs for graduate level education are eligible for the credit too. It also applies for part time students; great news for those of you in the work force while attending school.

Hopefully you filed your taxes already, and took every last deduction, exemption and credit you were entitled to. Here’s also hoping you didn’t get too big of a refund, because if you did, you lost out by letting the Feds invest your money for the last year, instead of investing it yourself.