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To help financially distressed homeowners lower their monthly mortgage payments, the Dept. of the Treasury and the Dept. of Housing and Urban Development (HUD) established HAMP. In appropriate cases, HAMP has been offering the Principal Reduction Alternative (PRA) as part of a HAMP loan modification since the last quarter of 2010. Current plans call for HAMP to continue accepting new borrowers through the end of 2013. Mortgage Reduction – Where the borrower satisfies certain conditions during a trial period, the principal of the borrower's mortgage may be reduced over three years by a predetermined amount called the “PRA Forbearance Amount.” ...

Effective for tax years beginning in 2013, taxpayers can elect a simplified deduction for the business use of the taxpayer’s home. The deduction is $5 per square foot with a maximum square footage of 300. Thus, the maximum deduction is $1,500 per year. Here are the details of this simplified method: · Annual Election – A taxpayer may elect the safe-harbor method or the regular method on an annual basis. Thus, a taxpayer may freely switch between the methods each year. The election is made by choosing the method on a timely filed original return and is irrevocable for that year. · ...

Two new laws that take effect in 2013 can significantly impact the taxes owed from the sale of property that results in capital gains. They include: Higher Capital Gains Rates – Starting in 2013, capital gains can be taxed at 0%, 15%, or 20% depending upon the taxpayer’s regular tax bracket for the year. Therefore, if your regular tax bracket is 15% or less, the capital gains rate is zero. If your regular tax bracket is 25% to 35%, then the top capital gains rate is 15%. However, if your regular tax bracket is 39.6%, the capital gains rate is 20%. Unearned Income Medicare Contribution Tax – This new ...

Prior to the recent economic downturn, flipping real estate was popular. With mortgage interest rates low and home prices at historical lows, flipping appears to be on the rise again. House flipping is, essentially, purchasing a house or property, improving it, and then selling it (presumably for a profit) in a short period of time. The key is to find a suitable fixer-upper that is priced under market for its location, fix it up, and resell it for more than it cost to buy, hold, fix up and resell it. If you are contemplating trying your hand at flipping, keep ...

If your employer provides the following employee benefits, you should participate in the ones that are applicable to you. Each one will reduce your federal and in most cases state taxes too. · Employer dependent care benefits allow you to exclude up to $5,000 in childcare expenses from your wages. · Employer health care plans allow you to exclude the cost of insurance for you and your family from your wages. · Employer 401(k) plans allow you to set aside $17,500 ($23,000 if you are 50 years or over) of year wages per year, tax deferred for your retirement. · Employer flexible spending arrangements ...