Taxpayer asks:
Last year, I moved in with my boyfriend at his condo. He lost his job so I paid most of the bills. I paid the mortgage direclty for most of the year. I also paid some of his credit card bills, the car payment and some of his child support paymnets so he didn’t get behind again. Can I take any of these things off on my taxes? Would it make a difference if we got married?
Taxgirl says:
You cannot deduct the cost of credit cards and car payments for personal use. Personal loans are never deductible.
Child support is likewise not deductible; in fact, child support is considered “tax neutral” (neither deductible to the payor nor taxable to the payee), unlike spousal support.
Mortgage interest is only deductible when you’re legally responsible for the note. Here, you’re clearly not since you indicated that it’s your boyfriend’s condo.
Now for the bigger question:
If you got married, it would only change the mortgage bit in terms of your deductions. Your husband would be able to take the mortgage interest deduction and charge it against your income. You’d also be able to claim an additional personal exemption against your income, assuming he’s still not working. Of course, this would not apply to last year – just this tax year if you got married by December 31, 2009.
I’m actually asked a lot whether it makes more sense to be married – or not – based on taxes. The answer is that it always depends on your situation from a tax perspective, though it tends, under the current system, to be more beneficial to file as married than single. Again, really facts and circumstances dependent.
That said, I run a business with my husband. And as I approach my own anniversary (it’s next week), I can honestly say that a business is not the same as a marriage. In business, you tend to make decisions that are largely based on dollars. In marriage, not so much.
This is not to say that financial decisions aren’t an important consideration in a marriage. It certainly is (you want to think about, for example, whether your potential spouse and you are compatible in terms of how you view money). But marriage is tough enough between two people: don’t drag Uncle Sam into it, too.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
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Taxpayer asks:
I had to put almost $100,000 worth of medical bills on credit cards. Three to be exact. Can the interest on these loans be deducted as medical expenses as I continue to pay the bills down over the next five years?
Thank you,
Taxgirl says:
Sorry, no. As I pointed out on a prior post, credit card interest is not deductible on your personal income tax return.
That’s the bad news.
The good news is that the medical expenses are deductible in the year that you make payment to the medical provider, not the credit card company. For more on timing of medical bills, see this recent “ask the taxgirl” post.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
Have a question? Ask the taxgirl! – Now on Facebook!
Taxpayer asks:
Thank you for taking my question. I do not know who else to ask. This is the first year for me to file taxes and I do not see where to put the interest that I paid on my credit card. I live with my grandmother and she says I can take it off my taxes. Thanks.
Taxgirl says:
Eke, I hope your grandmother doesn’t have a credit card! Credit card interest used to be deductible “back in the day” but the deduction was eliminated by Reagan. The 1986 tax bill was part of a sweeping set of changes introduced during the Reagan era which changed the way that Americans thought about borrowing. Deductions for almost all individual consumer debt – except for home mortgages and home equity loans – were eliminated.
Interestingly, when this happened, economists warned that it would single-handedly destroy the markets by cutting consumer spending. That never happened. For good or for bad, individual consumer spending on credit is at all time high, almost 25 years after the deduction was cut.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
Have a question? Ask the taxgirl! – Now on Facebook!
Taxpayer asks:
I spent most of last year paying off my credit card. A friend told me that this was deductible but I don’t know where to put it on my taxes. Where does it go?
Taxgirl says:
I’m guessing that your friend hasn’t filed a tax return since the Reagan era…
Personal debt (other than student loan interest and mortgage loan interest) is not deductible on your personal income tax return. It used to be – years ago – but was eliminated under the sweeping tax changes made in the Reagan era.
Congrats on paying off the debt. It’s not deductible – but don’t you feel better being debt free?
Thanks for reading!
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
Have a question? Ask the taxgirl!
