April 15 is the traditional due date for federal income taxes. It’s a deadline so ingrained in the American psyche that the April 15 calendar date is often called, simply, “Tax Day”.
In 2011, however, federal taxes aren’t due April 15. They’re due April 18. It’s because of a combination of holiday, calendars, and tax law.
The change centers on Emancipation Day.
Emancipation Day is a public celebration in the District of Columbia. Named a holiday in 2005, Emancipation Day honors President Abraham Lincoln’s April 16, 1862 signing of the Compensation Emancipation Act.
Emancipation Day is a non-working day in the nation’s capitol but, this year, Emancipation Day falls on a Saturday. The municipality will observe the holiday Friday instead. This means that all of Washington, D.C. will be “closed” Friday, April 15 — the usual tax filing deadline date.
This includes the IRS.
Therefore, to accommodate Emancipation Day, the government is extending this year’s federal tax filing deadline to April 18, 2011. This year marks the second time Emancipation Day has forced the change of federal tax filing deadlines.
Also, as a non-related coincidence, tax filers in Virginia taking extensions to October 15 will also get a few extra days. October 15 is a Saturday so the extended tax deadline rolls over to the following Monday — October 17, 2011.
Looking for an extra 2010 tax deduction? Consider making your January mortgage payment a few days early.
It’s a simple strategy that works because of how mortgage interest works.
Unlike rent which is paid in advance at the start of a month, mortgage interest is only paid after it’s been borrowed. Your January mortgage payment, therefore, accounts for the interest that accrued in December.
And for a lot of Chester homeowners, that mortgage interest is tax-deductible.
By making January’s mortgage payment in December, eligible homeowners can apply the interest paid to 2010′s tax returns instead of waiting to claim the same deduction against 2011. Don’t cut it close, though. It’s best to remit payment prior to the last week of the month, leaving your servicer ample time to receive and process your paperwork.
Most importantly, though, before prepaying on your mortgage, talk to your tax professional.
Not every homeowner is eligible for mortgage interest tax deductions, nor should every homeowner itemize their respective tax deductions. The “pay early” plan could be a wasted effort for you, ultimately, depending on your taxpayer profile.
If you don’t have an accountant that you trust, call or email me anytime; I’m happy to make a recommendation to you.
Well, it’s not a full extension of the tax credit that many of us were hoping for. However, the tax credit extension that has been approved by both the House and Senate will alleviate those buyers who had signed a contract by April 30th but did not close in time. For many, the delay in closing was due to short sale negotiations dragging on longer than 60 or 90 days. Now these buyers will have until September 30th to close. This extension won’t be completely final until it is signed by President Obama. However, that is expected to take place by the end of the week.
UPDATE 1-U.S. Congress backs home tax credit extension
WASHINGTON, June 30 (Reuters) – The U.S. Congress on Wednesday approved a bill extending the closing deadline for homebuyers trying to take advantage of a popular tax credit.
Homebuyers with contracts signed by April 30 who failed to go to closing by the June 30 deadline will now have until September 30 to complete their purchases. The House of Representatives on Tuesday approved the bill and it now goes to President Barack Obama for his signature.
The $8,000 tax credit for first time homebuyers and $6,500 credit for others purchasing a new primary residence was a highly popular temporary measure by the Obama administration to jump start home sales during the economic recession.
Real estate agents said thousands of homebuyers would miss the June 30 deadline because banks and settlement offices were struggling to deal with the volume of people rushing to close on their deals.
“In addition to helping thousands of families experience the American dream, this successful and popular program provides a much needed boost to Nevada’s housing market and economy,” Senate Majority Leader Harry Reid said in a statement.Reid, a Democrat, faces a tough re-election fight in Nevada, where the U.S. foreclosure crisis is most pronounced.
The Senate acted separately on the tax credit extension after another bill that included both the homebuyers measure and an extension of jobless benefits for the long-term unemployed was blocked by Republicans.
The jobless aid bill fell one vote short of the 60 needed to overcome procedural hurdles in the 100-member Senate. Republicans objected to the $34 billion cost of the bill.
The Democratic-backed bill would have extended the federal jobless aid program through November. Senate Republican Leader Mitch McConnell offered a two month extension that was paid for by using unspent money from last year’s economic stimulus program and Democrats objected.
As its June 30, 2010 closing deadline approaches, the federal home buyer tax credit is back in the news.
Unfortunately, the headlines are misleading.
Contrary to what you may have read (or heard), the federal home buyer tax credit has not been extended past June 30, 2010. At least not yet. And here’s why there’s confusion.
Look at these headlines from earlier this week:
- Senate Extends Date On Home-Buying Tax Credit (Philadelphia Inquirer)
- U.S. Senate Approves Extension Of Home Buyer Tax Credit (NASDAQ)
- Senate Approves Home Tax Credit Extension (Reuters)
Now, nothing above is factually incorrect, but each neglects a key piece of the country’s law-making process — it takes more than the Senate to pass a law. For a bill to become a law, it must pass the Senate and the House of Representatives and then it must be ratified by the President.
To date, we’ve only cleared just one of those 3 steps.
This means that the federal home buyer tax credit has not been formally extended. As of now, it’s still in discussion. Ultimately, though, if the extension does pass, it’s expected to extend the closing date deadline for Chesterfield home buyers beyond the original June 30, 2010 date into September 2010.
Homeowners must still have been in contract as of April 30, 2010 to claim up to $8,000 in federal tax credits.
Taxes are due April 15 and if you’re among the millions of Americans who wait until the last week to file, here’s a video interview that could help you reduce your federal tax liability.
Originally broadcast by NBC’s The Today Show, the 4-minute piece reviews various tax credits and deductions, plus some recent tax law changes. A few of the topics covered include:
- Tax filers receiving larger “personal exemptions” in 2009 versus 2008
- Unemployment income recipients being required pay taxes beyond the first $2,400 received
- The “first time” home buyer credit being extended to non-first time home buyers for up to $6,500
The interview also talks about how taking a parent, child or other family member into your home may change your tax filing status and reduce your tax liability.
Even if you’ve filed your taxes already, watch the video above. You may find that you missed a potential deduction. If that’s the case, consider filing an amended return with the IRS to recapture the credits you left on the table. Most times, the benefits of re-filing will outweigh the costs of doing it.
Be sure to talk with your tax professional for personal tax advice.