Great financial tips to ensure you make more dollar

In this article, we will take a look at the influence the government exerts over our daily lives through our taxation, and the good and bad aspects of that influence.

Through direct spending, the U.S. government controls approximately 43-45% of the economy. Today, government spending accounts for almost as much of the economy as spending in the private sector. After the passage of the New Deal legislation, during the late 1930s, the private sector controlled almost 90% of the economy. We have experienced quite a huge change in the last 2 generations. The average American remits about 5.3 months of his or her work year in order to support government spending.

The American economy is separated into two sectors: there is one that is dependent upon federal, state, and local government spending, known as the public sector; all others known as the private sector. The private business sector is funded by tax dollars collected from Americans. What the government decides to spend and allocate is primarily funded by our tax dollars.

Government spending controls $5.4 trillion dollars of the total spending, and when you figure in the $1.4 trillion government-forced spending, the government actually controls somewhere near 58% of the economys national income. That is a 3.5 times increase from a hundred years ago. And the economy has been in a steady decline. The ability of private sector growth to increase has been reduced over time, thanks to the fact that the government largely governs even private sector business.

Increased government control gets a big boost from the special interest groups, and the capability of big corporate entities to lobby Congress for programs and funding, as well as changes in tax laws that benefit them alone. In addition, government-funded welfare and public assistance programs are a major contributor to the government spending programs.

The problems with government spending are not going to end anytime soon. This isnt what our forefathers had it in mind when they broke free of oppressive British rule and penned the Declaration of Independence. Without major reforms, in the near future, we will see our children paying $25,000 each year to support an overburdened and imperious government.

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Even though many people think that refinancing their home is an expensive proposition, the truth is that refinancing can saves homeowners hundreds of dollars on a monthly basis. In addition to saving money each month on your house payment, there are also tax benefits associated with refinancing your home loan.

By making yourself aware of the potential tax benefits of refinancing and planning carefully, you can help keep a greater percentage of the funds you save in your own pocket.

Itemize Your Deductions

When you first finance or refinance your home, most of the money you pay each month goes toward the interest on your loan rather than toward reducing the principal balance. For many homeowners, taking advantage of itemized deductions allows them to save taxes because they are able to write off the interest paid in on their home loan.

Spouses who file joint income tax returns are able to deduct up to $1 million of interest each year. If you had a mortgage for $300,000 and you refinance your home with a $350,000 mortgage, you can enjoy increased tax deduction benefits associated with the additional interest you are paying.

Under Internal Revenue Service regulations, the amount of your new loan that replaces the original loan ($300,000) is home acquisition debt. The additional $50,000 of the new loan is classified as home equity debt. Interest paid on both types of home-related debt qualify as a legitimate tax deduction.

A couple of caveats: Be certain that the home equity debt must be less than $100,000 and the total amount of debt on the home does not exceed the actual value of the property.

Improve Your Home

Many people refinance your mortgage for an amount higher than their original loan amount for the purpose of making improvements to their home. In this situation, homeowners are able to take an advantage of an additional tax deduction equivalent the portion of loan points paid during the initial year of the loan.

This tax benefit covers all types of home improvements, assuming that that the improvement is within the scope of a reasonable improvement that has a positive impact on property value.

Additionally, interest paid on money used for expenses not related to home improvement may also be deductible in certain situations.

The Advantages and Disadvantages of Amortization

When you pay points to buy down the interest rate on a home loan refinance, you are able to recover some of the money through tax deductions. Points paid on a refinanced mortgage are amortized over the life of the loan. The amount that you pay in points can be written off, in even amounts each year.

If you end up selling your home before the loan is fully paid off, or if you refinance the home again, you are allowed to write off the remaining amount of the deduction in the year the home is sold or the loan is refinanced.

Learn Tax Advantages

To learn more about the tax advantages of refinancing your mortgage, read Home Mortgage Interest Deduction (IRS Publication 936). You should also speak with your tax advisor before making a decision.

You can learn more about the tax benefits of mortgage refinancing from the IRS Publication 936, Home Mortgage Interest Deduction. Its also important to consult with your accountant or tax attorney to learn how refinancing your home loan can impact you and your tax liabilities.

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