​If you rent rather than own a home, you could be missing out on tax benefits that favor home ownership. The current low interest rates make the cost of getting a mortgage relatively inexpensive, despite U.S. house prices at record highs.

Whether you decide to wait for the housing market to cool, or wish to take advantage of low interest rates while they last, take these tax benefits of home ownership into account:

• Equity build. When you pay rent, you’ll never see that money again. But when you pay your mortgage, you build equity that you realize when you sell your home. As long as the value of your home stays the same or improves, it's like a savings account built into your house payments.
• Tax-free profits. Profits you make selling your home for more than you paid for it are usually tax-free, up to $250,000 for individuals and $500,000 for married couples filing jointly.
• Mortgage interest deduction. Homeowners get to deduct the cost of the mortgage interest they pay as an itemized deduction. Since interest payments are front-loaded onto the early years of a mortgage, it makes this a big tax deduction for new homeowners.
• Property tax deduction. Property taxes are also deductible by homeowners as an itemized deduction. The average U.S. homeowner pays just over $2,000 in property taxes, but this can be much greater in high-tax areas.
• Mortgage interest rate point deduction. When you buy a home, you often pay your lender an extra fee to lower the interest rate on your mortgage. These “mortgage points” can be deducted from your tax bill over time, or all at once when you sell your house.

Buying a home is a complicated decision, especially in a seller’s market. But the tax savings over time can be significant. If you need advice on this or other tax-related matters, don’t hesitate to call.

​Many people dream of winning it big in the lottery. News media outlets publicize the large unclaimed pots of money on the evening news and they put a spotlight on the lucky multi-million dollar winners. Ever wonder what the tax math looks like?

​The bottom line, when seen from a wage standpoint, is that 75% or more of the income used to play the lottery does not end up in the hands of the winner.

If you operate a business out of your home, you may be able to deduct a wide variety of expenses. These may include part of your rent or mortgage costs, insurance, utilities, repairs, maintenance, and cleaning costs related to the space you use.

It is a tricky area of the tax code that's full of pitfalls for the unwary. Here are some of the top mistakes people make:

1. Not taking it. This is probably the biggest mistake those with home offices make. Some believe the deduction is too complicated, while others believe taking a home office deduction increases your chance of being audited. While the rules can be complicated, there are now simple home office deduction methods available to every business.
2. Not exclusive or regular. Your home office must be used exclusively and regularly for your business. Exclusively: If you use a spare bedroom as a business office, it can't double as a guest room, a playroom for the kids, or a place to store your hockey gear. Any kind of non-business use can invalidate your deduction. Regularly: Your office should be the primary place you conduct your regular business activities. That doesn't mean that you have to use it every day nor does it stop you from doing work outside the office, but it should be the primary place for business activities such as record keeping, billing, making appointments, ordering equipment, or storing supplies.
3. Mixing use with other work. If you are an employee for someone else in addition to running your own business, be careful in using your home office to do work for your employer. Generally, IRS rules state you can use a home office deduction as an employee only if your employer doesn't provide you with a local office. Unfortunately, this means if you run a side business out of your home office, you cannot also bring work home from your employer and do it in your home office. That could invalidate your use of the home office deduction.
4. The recapture problem. If you have been using your home office deduction, including depreciating part of your home, you could be in for a future tax surprise. When you later sell your home you will need to account for this depreciation. The depreciation recapture rules create a possible tax liability for many unsuspecting home office users.
5. Not getting help. There are special rules that apply to your use of the home office deduction if:
   • You are an employee of someone else.
   • You are running a daycare or assisted living facility out of your home.
   • You have a business renting out your primary residence or a vacation home.

​The home office deduction can be tricky, so ask for help, especially if you fall under one of these cases.

​​There's a simple "safe harbor" home office deduction. You take the square footage of your office, up to 300 square feet, and multiply it by $5. This gives you a potential $1,500 deduction under the simplified option. However, your savings could be much greater than $1,500, so it's often worth getting help to calculate your full deduction using the standard rules.

​The set it up and forget about it nature of automatic payments can create "zombie billing" cycles that go on without being reviewed or challenged, even after the product or service you pay for is no longer of value.

Here are some ideas to keep this from happening to you:

• Create a list. Make a list of the companies you authorize to use automatic bill payment. Include the account number each company uses, as well as payment amounts and frequency. When there's a change in a card or bank account, you can consult the list to find the companies you need to notify.
• Watch for fees. Make sure the bill-payment system you're using is low-cost or no-cost. Some companies will charge you a fee for automatic payments. If your biller wants to charge you, pay them with a traditional check. Consider consolidating all your automatic payments within one bill-paying service. Your bank may even offer online bill payment with no fee.
• Review underlying bills. Automated billing usually means you're not getting paper copies of your bill. If you're not receiving a physical copy, changes to your service may go unnoticed. If possible, opt to continue receiving email or paper billing statements. Review statements monthly to verify that your payment has not changed and there are no additional fees or errors.
• Drop underused services. Periodically review all automatic payments. Drop products and services that are no longer of value.

Automatic billing is meant to simplify your life, but if you allow it to turn into zombie billing, it will have the opposite effect. Take care to review your accounts and statements to protect yourself and keep your finances under your control.

Only about a third of Americans file income tax returns using itemized deductions. Unfortunately many of those who don't itemize are overpaying their taxes. Don't wait until tax time to figure out if itemizing your deductions yields a lower tax bill. Start now to review your situation and plan for a reduction in your taxes by the end of the year.

The standard deduction for 2017 is $6,350 for individual taxpayers and $12,700 for married couples filing jointly. If you can identify deductions over these amounts, your taxable income will be lower. The first step in this process is to estimate your known itemized deductions. Start by breaking out your potential itemized deductions into these five piles.

Pile #1: State and local taxes. You may deduct state and local taxes on either property or sales, but not both. If you live in a place with high property taxes, or you’ve made big purchases during the year and paid a lot in sales tax, this could be a big source of itemized deductions.

Pile #2: Mortgage interest. You can deduct interest paid to secure a primary or secondary residence. Since interest payments are front-loaded onto the early years of a mortgage, this is a big deduction for new homeowners.

Pile #3: Charitable contributions. Contributions to qualified charities can be used as itemized deductions. This includes cash donations, non-cash donations, and even mileage on behalf of qualified charities.

Pile #4: Medical expenses. Medical expenses greater than 10 percent of your adjusted gross income can be deducted from an itemized tax return.

Pile #5: Miscellaneous itemized deductions. With miscellaneous itemized deductions, you can generally deduct the total that exceeds 2 percent of your adjusted gross income. There are many potential deductions, such as:

• Job-related clothing and equipment
• Unreimbursed job expenses
• Job-hunting expenses
• Tax preparation fees
• Casualty and theft losses

Total up your potential deductions, remembering to only count the deductions for miscellaneous and medical expenses that exceed the adjusted gross income thresholds.

If You're Close but Not Quite There​
If you are near your standard deduction threshold, here are some ideas to push you over the line.

• Donate stock. If you donate cash to a favorite charity, consider donating profitable stock held more than one year. Not only will the donation be an itemized deduction based on the current value of the stock, the long-term gain will not be taxable.
• Make two years of giving in one year. Since you can claim donations when paid, consider prepaying next year’s donation in the current year. This effectively doubles your donations for one year, allowing for a higher itemized deduction total.
• Pay taxes prior to year-end. The same technique can be used with property taxes and other tax payments. Make next year’s payments in December of the prior year. This will effectively put two years of taxes into one filing year. While you may not be able to itemize deductions every year using this technique, it can yield a lower tax bill this year.
• Defer income. A good option for small businesses is to delay the receipt of income, which lowers the threshold for claiming medical expenses and miscellaneous deductions.

On occasion, shifting deductions may result in using itemized deductions in one year and the standard deduction in the next. However, if you plan well, you'll have a lower total tax burden over the course of both years. Please feel free to ask for help if you would like to review your situation.

Most new businesses start with no thought about legal structure. In the eyes of the IRS, the default structure is a "sole proprietor," in which your business profits are taxed on your personal tax return. This can serve you well to start, but there are several reasons you may want to consider incorporating as your business grows.
​

1. To protect your personal assets from creditors. When you operate your business within a corporation, creditors are often limited to corporate assets to satisfy a debt. Your home, savings, and retirement accounts are no longer fair game.
2. To provide a personal liability firewall. The corporate form can help protect you against claims made by others for injuries or losses arising from actions of your business.
3. To issue shares of stock. You can help build your business by issuing shares to new investors, or by offering stock options to key employees as a form of compensation.
4. To gain tax flexibility. A corporation can provide you with more tax flexibility. Deliberate planning can help optimize the taxable division between corporate income, dividends, and your personal wages.
5. To enhance your business presence. Being incorporated sends a signal that your business is a serious enterprise, and it could open doors to opportunities not offered to sole proprietors. Consumers, vendors and other businesses often prefer to do business with incorporated companies. 

Of course, there are other business structures other than sole proprietorships and corporations. The right structure for your business depends on your unique situation.

​The number of Americans struggling with high debt is increasing, according to the US Federal Reserve. Household debt in the US reached a new record this spring, the central bank said, with the average indebted household owing more than $16,000 on their credit cards.

Seeking debt forgiveness from lenders is one option to try to deal with the burden of high debt. But there is an important tax consequence: Any amount of cancelled debt is generally taxed as ordinary income.

This can come as a big surprise at tax time, when the relief of having settled a large debt is replaced by the anxiety of owing the IRS money.

Common Debt Forgiveness Surprises
Examples of when debt forgiveness can create a tax liability include:

• home foreclosures
• car repossessions
• credit card companies forgiving interest owed
• lenders agreeing to reduce or forgive credit card, medical or student loan debt
• lenders decide they can’t collect a debt, or give up trying

Will Payoulater hadn’t been making payments on a $40,000 car loan and woke up one morning to find his driveway empty. The bank had repossessed the car and cancelled the remaining $35,000 balance on his loan. However, due to depreciation and wear-and-tear, the car’s market value was only $20,000 when it was repossessed. Not only is Will down one car, he’ll also have to pay taxes on the $15,000 difference as cancelled debt income.

As you can see in this example, even the calculation of how much debt-forgiveness tax you owe can get complicated. What is the true market value of the car? Was the correct condition of the auto applied to the value? Getting some help from a tax professional can ensure you won't be overtaxed.

Some Exceptions
There are several situations where debt forgiveness is not taxable, including when:

• it happens as part of chapter 11 bankruptcy
• the debtor is insolvent (i.e. total debt exceeds the value of assets)
• student debt is forgiven as part of an agreement to work certain government and education jobs

If anyone you know is considering a debt settlement or has gone through one, please have them get in touch to work out the potential tax consequences.

It's not an easy time to buy a house, but it can be done. Nationwide, US house prices rose to their highest levels ever in November and have stayed elevated, according to the Case-Shiller Index tracking single-family home sales. Residential inventories also reached their lowest levels on record during the first three months of 2017, the real estate data site Trulia reported.

With high prices and low supply, homebuyers have to tackle the buying process differently than they would in a flat or down market. If you can, it may be worthwhile to wait to buy a house until the market cycle changes. However, that's not always an option.

​Preparation Is Key
In a seller's market you'll be competing with other motivated buyers for the house you want, so there's a benefit to acting quickly. If you take these steps to prepare, you can be fast and competitive without being frantic.

• Have your finances in order. Repair any issues to your credit rating; save as much as you can for down payment; and apply for a preapproval from your mortgage lender. If you can come to the negotiating table with a large down payment (20 percent or more is ideal) and your financing secured, you will be able to close your purchase more quickly.
• Research. Investigate the kind of houses you are interested in and the price range you can afford. Know your target neighborhoods before you start looking. When you search, start below your minimum range, with the expectation that you may have to make a better offer if there are competing bids.
• Get a good agent. In a tight market, having a reputable real estate agent with a good track record can give you an edge. Spend some time finding an agent who knows your target neighborhood and who can lend their expertise in closing a deal in a competitive marketplace. Now may not be a good time to work with someone new to real estate.

​Land Your Dream Home
Your finances are ready; you've researched what you want; and you secured the help you need. Here are the next steps to landing your dream home in a tight market.

• Be nimble, be flexible. Now you should be primed to quickly investigate new listings within hours of their first posting, if possible. If you're interested in a house but an inspection finds a few flaws, you may have to be flexible about accepting a house with a few quirks or in need of some repairs.
• Make a strong offer. A seller's market isn't a time to lowball your first offer on a house you want. If you've prepared and set your expectations below your minimum price range, you should be able to make a strong offer to make sure you are among the most attractive bidders. You shouldn't wildly overpay, but making a strategic offer above the listing price may sweeten the deal enough to close quickly.
• Earnest money. You may consider offering an "earnest money" deposit to show you are serious. Just understand that you may forfeit your deposit if you later change your mind.
• Few strings. Try to make your offer as simple as possible. The more contingencies, the more room for someone else to sneak in and snap up your target home. Flexible move in dates may help the seller navigate their purchase. Having to sell your home before buying theirs may create a snag versus another offer.

There are many resources available to you to navigate the home-buying waters. Spend some time finding the resources that work best for you and your situation.