Then you can do some quick tax math using the 2008 tax rates and the 2008 standard deduction and personal exemption figures to help you get a good idea of how much tax you'll be responsible for this year. Be sure to compare this tax liability against your projected withholding. You may need to adjust your paycheck withholding or make estimated tax payments if your projections show you might have a balance due. On the other hand, your projections could show that you'll have a significant refund. You'd then be able to adjust your withholding to have less taxes taken out of your paycheck. The IRS has a withholding calculator on their web site to help you figure out how many withholding allowances to claim. But you'll need first need a good estimate of your income, deductions and credits for the year before using the calculator.
This may also be a good time to organize your financial documents or start using personal finance software such as Quicken or Microsoft Money or the free utility GNU Cash. These software programs can help you keep track of your tax-deductible expenses throughout the year, making it easier to print out a report of your deductions at tax time.
Hello there,
I have a question:
I own my house for six years and it is my main residence. Am I in title to pay gain on the taxes if (single person) my house is sold for more than $500,000. of buying price?
Thank you very much,
Daniela
Hi Daniela. When you sell your house, the tax is figured on any profit. The first $250,000 of profit (or $500,000 for married couples) is exempt from tax. This is known as the Section 121 exclusion, named after the section of the tax law that applies to this situation. As long as you have lived in and owned the house for at least 24 months in the 60-month period that ends on the date of sale, you qualify for this tax-free benefit. Profits over this $250K (or $500K) amount are subject to the capital gains tax rate, currently at 15%.