Advertisement
taxes

Tax Questions and Answers

Kim Lankford responds to several readers questions related to taxes.

For today's column, I'm answering several quick tax questions.

Where can I find out about my tax refund? When should I get the money?

If the information on your return is accurate, you'll usually get your refund abut six weeks after filing a paper return; after three weeks if you file electronically. Refunds from amended returns are usually issued within eight to 12 weeks after filing.

Advertisement - Article continues below

The IRS has a great Where's My Refund? tool to help you track the status. You just need to type in your Social Security number, filing status and the exact amount of the refund included on your tax return, and you will get an immediate update. The tool only works after waiting at least seven days after e-filing or four to six weeks after filing a paper return.

The most recent issue of Kiplinger's Personal Finance included a Kip Tip that said the Roth IRA limits were $114,000 for single filers and $166,000 if you're married. Everything I have read says the limits are $110,000 and $160,000. Is this a new limit, and if so when does the full contribution start to phase out?

Those numbers in the Kip Tip are the 2007 income limits. To contribute to a Roth IRA for 2007, the adjusted gross income on a joint return must be less than $166,000 ($114,000 for singles). You can only contribute the full $4,000 for the year (or $5,000 if you're 50 or older) if you're married earning less than $156,000 (or $99,000 if single). IRS Publication 590 has a worksheet to help you calculate how much you can contribute if your income falls within the phase-out range.

Advertisement - Article continues below
Advertisement
Advertisement - Article continues below

The income limits increase a bit each year. The $160,000 limit for married couples ($110,000 for singles) was for 2006. You have until April 17, 2007, to make IRA contributions for 2006 and can also make 2007 contributions anytime now, too.

I refinanced my home in September of 2006. Can I deduct the points I paid on my taxes?

You can deduct a portion of the points paid when refinancing, but you'll need to do some math.

When you buy a house, the rules are easy: You can deduct points paid when you buy a house, even if the home seller paid them for you. But the rules get trickier if you pay points to refinance. In that case, the deduction must be spread over the life of the loan. So if you paid $4,000 in points to refinance a 30-year loan, you can deduct $133 for each of the next 30 years ($4,000 divided by 30), which can lower your tax bill by $33 per year if you're in the 25% bracket.

That write-off might seem too small to matter. But you may be able to get a bigger tax break in the future. If you sell the house or refinance again before paying off the loan, then you can generally deduct any remaining points at that point. If you refinance again after just one year, for example, you can deduct the remaining $3,867 ($4,000 minus $133) from the first time you refinanced. That can reduce your tax bill by $921 if you're in the 25% bracket.

If you didn't realize you could take this deduction, you may be able to file an amended return and get some money back. You generally have up to three years after your tax-filing deadline to file an amended return. You can download Form 1040X from the IRS Web site and make the change.

Advertisement
Advertisement

Most Popular

18 Things You Can't Return to Amazon
Smart Buying

18 Things You Can't Return to Amazon

Before tossing these items into your virtual shopping cart, be sure to read Amazon's return policy first.
September 17, 2020
Election 2020: Joe Biden's Tax Plans
taxes

Election 2020: Joe Biden's Tax Plans

With the economy in trouble, tax policy takes on added importance in the 2020 presidential election. So, let's take a look at what Joe Biden has said …
September 18, 2020
7 Foreign Countries Luring Americans to Work Abroad During the Pandemic
careers

7 Foreign Countries Luring Americans to Work Abroad During the Pandemic

Work remotely – really remotely – in these appealing destinations offering special visas for American workers.
September 18, 2020

Recommended

Most-Overlooked Tax Breaks for the Newly Divorced
tax deductions

Most-Overlooked Tax Breaks for the Newly Divorced

Filing taxes after a divorce can add yet another problem to an already long list of challenges. But here are some tips to make your return to single l…
September 18, 2020
When Are 2020 Estimated Tax Payments Due?
tax deadline

When Are 2020 Estimated Tax Payments Due?

If you're self-employed or don't have taxes withheld from other sources of taxable income, it's up to you to periodically pay the IRS by making estima…
September 11, 2020
How to Create Income for Life
Financial Planning

How to Create Income for Life

Having a paycheck you can depend on in retirement is more important than ever.
August 26, 2020
11 Tips on How and When to File an Amended Tax Return
tax returns

11 Tips on How and When to File an Amended Tax Return

What to do if you discover a mistake on a previous tax return (and other reasons for filing an amended return).
August 25, 2020