Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.
Q: My husband and I recently refinanced our first mortgage and a home equity line into a 15-year mortgage. We paid two points. Can we deduct those points over a 15-year period on our income tax as we would mortgage interest?
A: Yes. Points paid to refinance an existing mortgage generally are deductible prorated over the term of the loan. However, if the refinancing is incurred to provide additional funds for home improvements, the points can be deducted currently, in full, provided they are paid from separate funds.
Q: I pay in over $1,000 in church tithes by the end of the year. Can I use that deduction on a short form?
A: No. Charitable contributions are considered part of "itemized deductions" which must be reported on the "long" Form 1040, Schedule A, not on a short form (1040EZ). To determine if you should report itemized deductions and use the long form, you should compare your total itemized deductions to the standard deduction for your filing status. If the standard deduction is higher, and you meet the other requirements for filing the short form, then take the standard deduction. On the other hand, if you determine that claiming itemized deductions is advantageous, be sure you have written records, not just canceled checks, substantiating contributions of more than $250, from the qualified charitable organization.
The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.
A joint service from The Sun and the Maryland Association of Certified Public Accountants can help you with your tax queries. Association members, all CPAs, will answer questions from readers until April 15. To ask a tax question, call Sundial, The Sun's telephone information service, at (410) 783-1800. Using a touch-tone phone, enter 6225 after you hear the greeting.
Callers are asked to leave their names and phone numbers should questions need to be clarified. Selected questions will be answered in the Business section. No questions will be answered by phone. Names and numbers will not be published.