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This week in the tax office; Did you Refi in 2021??

In the last year the interest rates from the feds was really low and a lot of clients decided to refinance their home loans. Now although I am always a big cheerleader of putting money back into your pocket, what it has caused for some clients is that they actually don’t make it past the standard deduction. This change became common because the IRS put a $10,000 cap on all local and state taxes (which include your property taxes, local taxes, your state income taxes and your state disability insurance these are all local taxes that you pay that normally) and before 2018 you got to write off the full amount of what these added to. (In high tax states this number was easily larger than the old standard deduction) now people who were able to itemize in the past could no longer do so. Others who had high mortgage interest rates and paid over $14,401 in total interest could still itemize. And what we are finding this year is that those taxpayers refinancing to the super low rate, can no longer itemize their deductions and now they too are forced to use the standard. Now this is not necessarily a bad thing. It is always better to put the money back in your pocket. But it is still caused peoples tax returns to look pretty different from how they looked in the last couple of years. Do you know if you itemize or use a standard deduction? You should. Another problem I see when clients are new is that although they give all their paperwork, interest, donations, dmv etc. that does not mean that they are actually itemizing even though they believe they do. I address this in my Course 1 and 7 “Know the Lingo” and “The Whole Shabang” on my website I show you how to understand your own tax return to feel less stressed about taxes overall. Subscribe to my blog for weekly updates.

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