5 ways to stretch your tax refund

Both the Michigan Department of Treasury and the Internal Revenue Service are busy these days processing tax returns and issuing refunds to millions of Americans. The average federal refund last year was $2,869 according to an analysis of data from the IRS.

It’s a sad reality that bars, restaurants, and casinos all get busier when tax refunds arrive. For those who want to use that refund to make a long term difference in your family’s situation, I offer five ways in which you can stretch your tax refund.

Making a payment | Stock photo by StockSnap/Pixabay

Switch to annual payments
Your auto, home, and life insurance premiums. Subscriptions to one streaming service or another. These are just some of the bills that most Americans have that offer a discount if you can pay them on an annual or semi-annual basis instead of paying them monthly. You can save hundreds of dollars by switching to an annual basis and this is one discount that companies are thrilled to give you.

For most Americans most of the year, they simply don’t have enough cash on hand to take advantage of these offers and realize the savings. Your tax refund, however, provides an opportunity to break out of this cycle and start saving money.

I recommend starting with your insurance premiums. Talk with your insurance agent to see what kind of a discount you can get by switching to an annual or semi-annual payment.

Paying | Stock photo by Quinn Kampschrorer/Pixabay

Pay down debt
This one is kind of a no-brainer. The average American has four credit cards and carries a balance of $8,640. If you only make the minimum payments, it will take decades for you to pay that off. Paying down your debt means huge savings in interest charges.This is especially true with high-interest credit cards.

Your tax refund provides an opportunity to pay down some debt. This can either be by taking money directly from your refund check and paying it down or by taking some of the money that you saved from switching to annual payments and adding a few extra bucks to each month’s payment.

For Detroiters looking to get a handle on their debts, help is available through the Financial Empowerment Center. I wrote about this program last November and details about it are available here.

Boost savings | Stock photo by Manuel Alejandro Leon/Pixabay

Boost savings
If you don’t have a savings account, now is the time to start one. If you don’t have at least six months worth of basic living expenses in your savings account, now is the time to make a deposit.

Just like when it came to paying down debt, you can boost your savings directly from your income tax refund or by using the money that you saved from switching to annual payments and/or paying down debts.

Also, remember that you have until April 15, 2020 to make a 2019 contribution to your IRA.

Saving energy | Stock photo by PIRO4D/Pixabay

Energy saving improvements to your home
For most Americans, your home is your single biggest investment by far and utilities are one of the biggest expenses for that investment. By making a few improvements, you not only lower your energy costs but also boost the resale value of your home.

Plus, making energy savings improvements to your home today can also mean a bigger tax refund next year in addition to lower energy bills.

Having fun | Stock photo by Free Photos/Pixabay

Have a little fun
While I believe that the bulk of your tax refund should go towards improving your family’s long term financial strength, there’s nothing wrong with having a little bit of fun along the way. Dinner and a movie with your spouse is a classic option.

For those who want something a little different, websites like Groupon offer deals on all kinds of fun things to do.

These tips are brought to you by the Warrendale Detroit Blog as part of our Tip of the Week series. Please check back next week for more advice on your home, money, and life. The rest of the tips are avilable here.

Please feel free to follow the author Frank Nemecek on Twitter and Instagram as @fnemecek for more great content.

Detroit introduces a plan to cut the number of home foreclosures

An Anmerican Home - Stock photo by Pexels

Wayne County Executive Warren C. Evans, Mayor Mike Duggan, and Wayne County Treasurer Eric Sabree called on the Michigan Legislature to implement a sweeping new approach to assist tens of thousands of Detroiters and Wayne County residents who owe back property taxes avoid foreclosure. The plan builds on steps the City and County have already taken to reduce occupied home foreclosures by 94% since 2015.

Michigan State Representative Wendall Byrd (D-3) has introduced legislation that will facilitate this proposal. They call this proposal to minimize foreclosures Pay As You Stay or PAYS. This proposal aims to reduce tax foreclosure for Detroit homeowners who live in poverty and who are struggling to make payments.

According to data from the City of Detroit, this plan would help approximately 31,000 homeowners stay in their homes by dramatically reducing the amount they owe on their back taxes and lowering their monthly payments.

This payment plan is available to all those eligible for the poverty tax and disabled veteran exemptions. It will remove interest, penalties, and fees so only back taxes or 10% of taxable value is owed whichever is less. This will include any past due balance on the City of Detroit’s solid waste fees.

Pay As You Stay is a simple, three-part plan:

1. Once you enroll, all interest, penalties and fees would be eliminated;
2. To reduce an undue burden on homeowners, the balance due would be limited to back taxes only or 10% of a home’s taxable value – whichever is less; and
3. The remaining balance would be paid back over three years at zero percent interest.

Homeowners who qualify for a full or partial Property Tax Exemption and enroll in future years would be eligible for the program. To be PTE-eligible, a household with 1 person could not make more than $19,303 per year; a household with 4 people could not make more than $28,671.

“Since 2015, we’ve been able to reduce the number of occupied foreclosures by 94%, but far too many Detroiters still are at risk of foreclosure,” said Mayor Mike Duggan. “Pay As You Stay would help more than 31,000 Detroit homeowners stay in their homes by eliminating interest, penalties and fees and making payment plans affordable for those who need them.”

Detroit City Council Member Janee Ayers added in a statement on Facebook, “Our city can only thrive if we work with our most vulnerable residents who have stayed here through the hardest times.”

More information about this Pay As You Stay proposal is available on the City of Detroit's website.

The Warrendale Detriot Blog will continue to follow this story as it develops and the PAYS legislation moves throught the Michigan Hosue of Representatives.

My Aretha Franklin story

Aretha Franklin - Photo by Joe Ortuzar/Flickr

The funeral service for the Queen of Soul herself Aretha Franklin was on the television when I went to lunch today. There was an elderly gentleman in the diner who spent his time complaining about how Aretha Franklin wasn't that great of a person.

The worst example that this man could think of as he struggled to make his argument had to do with a property tax dispute Aretha Franklin was involved with back in 2015. That was it. A property tax dispute.

I mention this because if - at the end of a long life - the worst thing your harshest critic can think to say about you is a property tax dispute then - as far as I'm concerned - you are a wonderful person who lived an amazing life. I hope and pray that Aretha Franklin was able to hear his rant from Heaven and was laughing her butt off.

Mayor Duggan to meet with the neighborhood

Mayor Mike Duggan of Detroit - File Photo

The City of Detroit recently announced that Mayor Mike Duggan will have his annual District 7 Community Meeting on Monday, August 20. This event will start at 7 p.m. at the Straight Gate International Church (10100 Grand River Ave.) and is expected to conclude at 8:30 p.m.

This meeting is an opportunity for residents, business owners, and other interested parties in Warrendale and the surrounding neighborhoods to bring any questions or concerns they might have directly to Mayor Duggan in a public setting. Representatives from the various City departments will also be on hand.

The annual meeting is required by the Charter for the City of Detroit, which mandates that the Mayor hold at least one of these meetings each year in each of the seven City Council districts.

Anyone with any questions or concerns about our local government is invited to attend this meeting.

Tip of the week: Nine common filing errors to avoid

It's tax season and the Internal Revenue Service has release their list of the nine most common errors in tax returns. It's my pleasure to share this with my readers as part of this blog's semi-regular Tip of the Week feature.

Without further ado, here are nine common errors to avoid when preparing a tax return:

1. Missing or inaccurate Social Security numbers. Be sure to enter each Social Security numbers on a tax return exactly as printed on the Social Security card.

2. Misspelled names. Spell all names listed on a tax return exactly as listed on that individual’s Social Security card.

3. Filing status errors.  Some people claim the wrong filing status, such as Head of Household instead of Single. The Interactive Tax Assistant on IRS.gov can help taxpayers choose the correct status. E-file software also helps prevent mistakes.

4. Math mistakes.  Math errors are common. They range from simple addition and subtraction to more complex items. Transactions like figuring the taxable portion of a pension, IRA distribution or Social Security benefits are more difficult and result in more errors. Taxpayers should always double check their math. Better yet, tax preparation software does it automatically, so file electronically.

5. Errors in figuring tax credits or deductions.  Filers can make mistakes figuring their Earned Income Tax Credit, Child and Dependent Care Credit, the standard deduction and other items. Taxpayers need to follow the instructions carefully. For example, if a taxpayer is age 65 or older, or blind, they should be sure to claim the correct, higher standard deduction. The IRS Interactive Tax Assistant can help determine if a taxpayer is eligible for tax credits or deductions.

6. Incorrect bank account numbers.  The IRS strongly urges all taxpayers who have a refund due to choose direct deposit. It’s easy and convenient.  Be careful to use the right routing and account numbers on the tax return. The fastest and safest way to get a refund is to combine e-file with direct deposit.

7. Forms not signed.  An unsigned tax return is like an unsigned check – it’s not valid. Both spouses must sign a joint return. Taxpayers can avoid this error by filing their return electronically. Sign an e-filed tax return digitally before sending it to the IRS.

8. Electronic filing PIN errors. When e-filing, the taxpayer signs and validates the tax return electronically with a prior-year Self-Select Personal Identification Number. If they do not have or know their PIN, they should enter the Adjusted Gross Income from their 2015 tax return originally filed with the IRS. Taxpayers should keep a copy of their tax return.

Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return. Do not use the AGI amount from an amended return or a return that the IRS corrected.

9. Filing with an expired ITIN. A tax return filed with an expired Individual Tax Identification Number (ITIN) will be processed and treated as timely filed, but will be processed without any exemptions or credits claimed. Taxpayers will receive a notice from the IRS explaining that an ITIN must be current before any refund is paid. Once the ITIN is renewed, exemptions and credits are processed and any allowed refund paid. ITIN expiration and renewal information is available on IRS.gov 

Avoiding these common filing errors on your tax return is your Warrendale Tip of the Week.

The City of Detroit has finished its reassessment of every residential and commercial property within the city limits. This means that the assessed value of our homes and businesses is now more in line with the fair market value of them.
This, by the way, is the first time in decades that the City of Detroit has reassessed all of our property values.
From my own personal experience, this updating of property values means that my property taxes has gone down by $294.
I want to thank Mayor Mike Duggan and his team for making sure that this happened.

Tax help available for veterans

Tomorrow, February 15, select volunteer income tax preparation sites across Michigan will be celebrating all men and women who served in the Armed Service by offering free income tax preparation services. At sixteen locations across the state, any military veteran in Michigan will qualify to have their federal, state and city income taxes prepared and filed for free by an IRS-certified volunteer tax preparer. Sites will also provide information on different veteran services offered through the Department of Veterans Affairs, the Michigan Taxpayer Advocate Office and the Consumer Financial Protection Bureau’s Financial Counseling for Veterans initiative.

There will be two locations available within the city of Detroit. AAS Piquette Square (6221 Brush St. in Southwest) will be open from 10 a.m. until 2:00 p.m. Also, the Wayne Metro CAA/Michigan Veterans Foundation (4626 Grand River, just south of W. Warren Ave.) will be open from 10 a.m. until 3 p.m.

“It’s hard to think of organizations who are as dedicated to helping my fellow veterans prepare and file their taxes and receive other important information on financial services and programs,” said State Senator David Knezek (D- Dearborn Heights). “Receiving quality, no-cost services like those offered by CEDAM members is a welcome gesture for the men and women who served our great nation.”

Every year, more than 100,000 Michigan taxpayers get their taxes prepared and filed for free at either a volunteer income tax assistance (VITA), tax counseling for the elderly (TCE) or AARP Tax Aide site. These sites are staffed with volunteers who have been certified by the IRS to prepare income taxes – a training certification that is not required of commercial tax preparers. Usually, there is an income limit of $54,000 to access this high-quality, free service, but on Wednesday, February 15 there will be no income limit for veterans in Michigan.

“As a veteran and former employee of the Michigan Department of Treasury, I understand the importance for taxpayers to receive all eligible and deserved tax credits,” said State Representative Tom Barrett (R – Potterville). “That is why I am so pleased that these free volunteer tax sites across Michigan are stepping up to the plate to give Michigan veterans a quality service and ensure they receive all their eligible tax credits.”
 
In addition to being trained on federal tax law, all VITA/TCE and AARP Tax Aide volunteer preparers are also trained to be sure that every eligible client receives Michigan tax credits like the Michigan Property Tax Credit (MPT) and the Home Heating credit (HHC). In 2016, more than 105,000 Michigan taxpayers used a free tax service, avoiding high-pressure sales pitches for high-cost tax loans and saving more than $14.6 million in tax preparation fees.

“I am pleased to join these IRS certified free tax sites in honoring the men and women who answered the call to serve our nation and protect our freedoms by helping to ensure they receive quality assistance in filing their taxes from highly-trained and IRS certified volunteers,” said Ross H. Yednock, program director of the Michigan Economic Impact Coalition (MEIC) at the Community Economic Development Association of Michigan (CEDAM). “I hope that by helping to serve those who served prepare and file their federal, state and city income taxes, we can make their tax filing season a little easier.”

The MEIC is a program of CEDAM and helps support organizations and local initiatives committed to supporting tax credit and asset building opportunities for Michigan families. All taxpayers are encouraged to go to www.MichiganFreeTaxHelp.org in advance of filing their taxes to receive valuable information regarding federal and state tax credits. The website is maintained by the CEDAM to help connect Michigan workers with free services and free tax sites which save working families money on tax preparation fees and connects them to other quality, low-cost financial services to help increase their financial security.

Taxpayers in Michigan have several options for free help determining their eligibility and claiming credits. They can go to a VITA, TCE or AARP Tax Aide site or prepare their own taxes using a free internet-based tool with assistance from a VITA volunteer either in person or over the phone.

To help accurately determine eligibility and prepare returns at a free tax site, individuals should bring photo proof of identification as well as:

• Social Security cards for themselves, their spouse and dependents or Social Security number verification letters issued by the Social Security Administration;
• Birth dates for all persons listed on the tax return;
• Wage and earning statement(s) Forms W-2, W-2G and 1099-R from all employers;
• Interest and dividend statements from banks (Forms 1099);
• Copies of last year’s federal and state returns, if available;
• Bank routing and account numbers for direct deposit of their refunds;
• Other relevant information about income and expenses; and
• Amounts paid for day care, if applicable and the day care provider's identifying number.

To electronically file their returns and get the fastest refunds, both spouses must be present to sign joint returns.

To locate a volunteer income tax assistance site in Michigan, or connect with volunteer assisted self-preparation tools, visit www.MichiganFreeTaxHelp.org or call Michigan 2-1-1.

Water deal on the line

The deal to create a regional water authority for southeastern Michigan is in trouble, according to published news reports. The City of Detroit's bankruptcy plan called for such an authority to be created no later than June 14. Macomb County Executive Mark Hackel doesn't appear inclined to go along with it.

If Hackel doesn't like the deal, that's between him and the people of Macomb County. I'm okay with this deal falling apart.

If there is no deal on a regional water authority then there is nothing to prevent the City of Detroit to retain ownership of that portion of water system that is within its city limits but sell the suburban portion of it. Such a sale would not only remove the water system's debt from the City's books, it would likely also leave us with more than $1 billion in cash.

The cash from such a sale could then be used to pay down some of the other debt that Detroiters carry - either debt from the City of Detroit itself or from the Detroit Public Schools. Either way, paying down our debts would enable us to lower our property taxes.

And lower property taxes - either as reduction in debt service levied by the City of Detroit or a reduction in what the Detroit Public Schools levy - would be welcome in a city like Detroit which has the highest taxes in Michigan.

If Hackel isn't happy with the regional water deal, that's between him and the people of Macomb County. I simply hope that Mayor Mike Duggan, Councilman Gabe Leland, and the other members of the City Council use this opening as a chance to advance the interests of our residents.

Let the deal fall through, if Hackel continues to object.

Sell the portion of our water system that is in the suburbs to any number of private investors.

Use the proceeds from such a sale to pay down debts - for either the City of Detroit or the Detroit Public Schools.

Once the debt is paid down, lower the debt service levy on Detroiter's property taxes.

The choice is clear. The only question that remains is: what will Detroit's leadership do?

10 tips for amending your federal tax return

If a taxpayer discovers that he or she made an error in his or her federal tax return, and discovers this fact after filing said return with the Internal Revenue Service, it is generally best to file an amended return. The IRS will automatically correct simple mistakes involving errors in arithmetic without any action from the taxpayer. However, any other mistakes should be corrected with an amended return.

With that said, here are 10 tips from the Internal Revenue Service about amending one's federal income tax return:

1. When to amend a return. You should file an amended return if you need to correct your filing status, number of dependents, total income, tax deductions or tax credits. The instructions for Form 1040X, Amended U.S. Individual Income Tax Return, list additional reasons to amend a return.
2. When NOT to amend a return. In some cases, you don’t need to amend your tax return. For example, the IRS usually corrects math errors when processing your original return. Also, if you did not include a required form or schedule then the IRS will send you a request for whatever is missing.
3. Form to use. Use Form 1040X to amend a previously filed Form 1040, 1040A, 1040EZ, 1040NR or 1040NR-EZ. Make sure you check the box to show the tax year that you are amending on the Form 1040X. You cannot e-file an amended return. You must file an amended tax return on paper.
4. Multiple amended returns. If you’re filing an amended return for more than one year, prepare a separate 1040X for each return. Mail them in separate envelopes to the appropriate IRS processing center.
5. Form 1040X. Form 1040X has three columns. Column A shows figures from the original return. Column B shows the changes you are making. Column C shows the corrected figures. There is also an area on the back of the form where you should explain the specific changes and the reasons for the changes.
6. Other forms or schedules. If the changes involve other tax schedules or forms, attach them to the Form 1040X. Failure to do this will cause a delay in processing.
7. Amending to claim an additional refund. If you’re expecting a refund from your original tax return, don’t file your amended return until after you have received that refund. You may cash the refund check from your original return. The IRS will send you any additional refund you are owed.
8. Amending to pay additional tax. If you’re filing an amended tax return because you owe additional tax, you should file Form 1040X and pay the tax as soon as possible to limit any interest and penalty charges.
9. When to file. To claim a refund, you generally must file Form 1040X within three years from the date you filed your original tax return or within two years from the date you paid the tax, whichever is later.
10. Processing time. Normal processing time for amended returns is eight to 12 weeks.

One can obtain a copy of IRS Form 1040X by visiting the IRS website here.

How to amend a federal income tax return is your Warrendale Tip of the Week.

Vindication from 24/7 Wall Street

The Spirit of Detroit

The folks at 24/7 Wall Street, which provides analysis to equity investors, published a list of best and worst managed cities in the United States. I don't think it surprises very many people that Detroit came in at number four on their list of the worst managed cities.

Plus, the only reason why Detroit wasn't rated even worse than it actually is that Mayor Dave Bing has enacted at least some of the reforms that he opposed when he first came into office. Their full list of the best and worst managed cities in the United States is available here.

As someone who has spent more than 20 years following the financial operations of the City of Detroit, and who has submitted several proposals on how to improve the situation only to be ignored or ridiculed by those who were in power who insisted that they had everything under control, I have to admit that I feel a certain amount of vindication from this listing.

Can We Compromise on Mayor Bing's Tax Proposal?

Mayor Dave Bing and the Detroit Police Commission proposed raising our property taxes in an effort to generate more money for the Detroit Police and Fire Departments. The Bing Administration argues that it is absolutely essential given the current budget condition.

Many critics, however - and this includes some on the City Council - believe that the Mayor hasn't done enough to manage his current budget effectively. Recent new reports of the Police Department wasting $4 million on expired car leases only reinforce that contention.

With that in mind, I'd like to propose a compromise. Mayor Bing can have his tax increase. I'll pay it. In return, I believe certain conditions should be written into this increase.

In return for the additional tax revenue, the Detroit Police Department should be required to:

• Eliminate the rank of deputy chief. Anyone who currently holds it should have a choice between retirement or reduction in rank and a return to patrol duty.
• Reduce the number of assistant chiefs to no more than four. The Police Commission can determine the exact areas of responsibility for each of them.
• Reduce the number of aides and secretaries the chief and assistant chiefs have. This is one of the most persistently bloated parts of DPD's budget. Each assistant chief should one civilian secretary and one sworn officer as an aide. The chief of police should only get one civilian secretary and two aides.
• All police officers hired with this new tax revenue must be assigned to either patrol, investigative, or special operations duty. In other words, every one of them should be in the field in one capacity or another. We really don't need more police officers doing desk jobs.

As for the Detroit Fire Department, they should be required to phase out the rank of sergeant. Anyone who currently holds it should be allowed to hold onto it, but no one else should be promoted into it.

By doing this, Mayor Bing gets the extra tax revenue that he wants. In return, Detroiters will get progress towards improving our public safety.

$1 Billion in Unclaimed Income Tax Refunds

Did you know that according to the Internal Revenue Service, there are still unclaimed refunds for those who did not file 2008 tax returns? With approximately seventy-five percent of tax returns resulting in a refund, Jackson Hewitt Tax Service reminds the one million taxpayers who haven’t filed a 2008 tax return that the time to act is now – before the window of opportunity closes on April 17, 2012.

“The IRS offers a three-year window for filing a federal tax return, and for the 2008 tax year, the cut-off date is coming soon,” explained Mark Steber, chief tax officer at Jackson Hewitt Tax Service. “Approximately half of the refunds available are for $637 or more, so it’s wise to spend the time filing for 2008 now, as you are tackling this year’s preparation and filing.”

There are several reasons why a taxpayer may have neglected to file, including having too little income to require filing. However, even if someone’s income was too low, they likely had money withheld from their employment that is now available to them as a refund. In addition to receiving money that was withheld, filing a 2008 tax return also allows those who are eligible to claim certain credits, such as the Recovery Rebate Credit, the First-Time Homebuyer Credit or the Earned Income Tax Credit.

To claim a 2008 refund, taxpayers must have filed for the 2009 and 2010 tax years. Taxpayers will not incur any late filing penalty and will be able to receive their refund if they file a return by April 17, 2012.

“Remember, this is your money, so be sure to file your return and claim your refund,” explained Mr. Steber. “Otherwise, it becomes the property of the U.S. Treasury.”

 

Unclaimed income tax returns, and how to claim them, are your Warrendale Tip of the Week.

7 Things That Should Be Changed in the Proposed Consent Agreement

Governor Rick Snyder unveiled his proposed consent agreement last Tuesday. Since then, there has been almost unending amount of howling from certain quarters within our community. Those complaints, by the way, came from many of those who were also opposed to the various reforms that we written into the new City Charter that was overwhelmingly enacted last year. Regardless of how much those individuals might protest, the fact of the matter is that consent agreement is likely coming very soon and it's probably the best thing for Detroiters.

With that in mind, I would like to offer seven specific suggestions that I believe Mayor Dave Bing as well as everyone on the City Council and Lansing should carefully consider.

#1. Guarantee Public Involvement in the Process

No matter what someone somewhere might plug into a spreadsheet, the fact remains is that it is our tax dollars that are being spent here and our futures that are at stake. While Governor Snyder was busy building his fortune, thousands of middle class families were fighting to make Detroit a place worth living in. Their efforts, quite frankly, are the main reason why this town is still standing.

If those families are going to be asked to continue the fight, and if new ones are going to asked to join in, then they must be guaranteed that they will have an opportunity to have their objections heard and their suggestions duly considered. There will unquestionably be a loud outpouring of people that my friend Jeff Wattrick of MLive.com refers to as "grape throwers" in his columns. It could be tempting to shut them out out of the process, but shutting them out also means shutting out the ordinary middle class families who have kept Detroit afloat for this long, which only gives those families yet another reason to leave.

Tip of the Week: Tax Benefits of Home Ownership

Home ownership is a big a part of the American Dream. When that dream becomes a reality, there are many great tax breaks that can come along with it. This tax season, I wanted to pass along a few tips from my friends at Jackson Hewitt Tax Service about the many credits and deductions that can add thousands of dollars to your refund.

“There are a wide variety of tax breaks available to existing homeowners and first-time homebuyers,” Mark Steber, chief tax officer at Jackson Hewitt Tax Service, explained in a statement. “Speaking with a local, knowledgeable tax preparer can help ensure taxpayers take advantage of all the home ownership-related credits and deductions for which they are eligible.”

For homeowners, Mr. Steber notes that there are several tax breaks available covering home-related areas, such as:  

Mortgage Interest

The amount of mortgage interest paid on a principal residence or second home is deductible and generally reported on Form 1098. Taxpayers can also deduct all the points paid to purchase the residence, even if some have been paid by the seller. If certain requirements are met, the points may be deducted in full in the year paid. Otherwise, they may be deducted over the life of the mortgage. Seller-paid points that taxpayers claim as an itemized deduction reduce the cost basis of the home. 

Buying a Home

Most of the expenses incurred when buying a home are not deductible. However, there are certain closing costs that are added to the basis of your residence. Keeping track of the basis of your home is important because when selling, it is needed to calculate any gain or loss.

Property Taxes
Taxpayers may deduct real estate property taxes in the year paid. They may be reported on Form 1098, the annual statement from the financial institution holding your mortgage. Taxpayers may also be able to deduct some of the taxes paid during closing. The taxes must be the responsibility of, and paid by, the taxpayer.

Energy Credits

There are energy credits available for making energy efficient changes to a home. For 2011, the credit is limited to 10% of the cost of improvements, up to a lifetime total of $500. The credit will be further limited for each category of improvement. 

Home Improvements

Home improvements are not generally deductible on a tax return. Instead, the cost of improvements is added to the basis of the home and helps keep any gain below the $250,000 ($500,000 if married filing jointly) exclusion amount when the house is sold.

For those who find themselves in the unfortunate position of a foreclosure or short sale on their home, there are tax breaks available as well. Foreclosures and short sales are treated as both a home sale and a canceled debt. When the house is a taxpayer’s primary residence, and they have lived in and owned the home for two of the last five years, any gain up to $500,000 on the disposition is tax-exempt. In addition, the canceled debt (mortgage still owed) is excluded from taxable income, as long as it is less than $2 million and is for the taxpayer’s principal residence. 

To learn more about home ownership-related tax benefits, please visit www.jacksonhewitt.com or call 1-800-234-1040 to find a local Jackson Hewitt office.

Knowing my about the tax benefits of home ownership is your Warrendale Tip of the Week.

Density Doesn't Solve Everything

Jane Jacobs

I'm a huge fan of population density. I have lived in and visited other cities with a lot more density than Detroit. I've seen its benefits on a firsthand basis. I've also been known to thrust Jane Jacobs's books in the faces of random people and urge them to read her works.

When Mayor Dave Bing started talking about increasing Detroit's population density, I was pleasantly surprised. There was a moment when I thought that we had an administration that got it; one that was able to move Detroit forward. Unfortunately, a year later, all we have is talk.

The worst part of this is that Detroiters still pay a tax burden that is roughly double national averages and we still suffer through public services that are almost non-existent. There seems to be a general acknowledgement that we need to change these things. However, we as a community have not made any real progress towards improving these matters over the past year.

I have, however, heard several people postulate that once a plan to improve Detroit's density is finalized and implemented things will start to improve. I have even heard people argue, in complete seriousness, that improving Detroit's population density is a prerequisite for improving basic city services.

This argument is, in my opinion, downright terrifying. The fact that I keep hearing this means that a sound urban principle, such as population density, has become nothing more than a corporate buzzword that is thrown around in lieu of actual ideas or actions.

For everyone who believes that Detroit cannot improve its core city services or reduce its tax burden until it improve its population density, I ask you to consider a few things:

Save Rouge Park. Again.

Rouge Park, which is the largest municipally owned park in the United States, is currently slated to close on Thursday, July 1 due to budget cuts. As a result of this, grass will no longer be cut in the park, trash will no longer be collected, no maintenance will be performed on any of the facilities, and all programming in the park will end.

It is widely expected that the lack of grass cutting, trash collecting, and maintenance will have a severely adverse impact on the 457 homes that are immediately adjacent to Rouge Park as well as the approximately 3,000 other homes that are within a 500 foot radius of it. All of this, of course, is in addition to the loss of recreational opportunities for all Detroiters.

From an economic standpoint, one should point out that allowing the park to become a blighted area will have a detrimental impact on Detroit's budget in th long-term. The 457 homeowners who are immediately adjacent to Rouge Park pay an estimated $1.1 million in property taxes. If one includes those homes within 500 feet of the park, that total jumps to $7.8 million. If a significant amount of homeowners are forced to abandon their homes as a result of this blight, the City of Detroit will have to make additional cuts next year in order to accommodate for that drop in tax revenue.

As a result of this proposal, the Friends of Rouge Park have organized a rally in opposition to this closure. It will happen on Monday, June 28 at 5 p.m at the Brennan Pools in Rouge Park. The pools are located just south of Plymouth Rd. in the park. A map is available here.

Lisa Howze for City Council

Lisa Howze is the only certified public accountant in the City Council race. In a city that is dealing with both a crush tax burden and staggering budget deficits, I believe there is a certain value to having an accountant on the City Council.

Lisa Howze has 14 years of public accounting and client service experience, which includes creating budgets, reviewing contracts, analyzing financial results, performing financial as well as operational audits, and managing client expectations. During her tenure with Arthur Andersen LLP, once a “Big Six” accounting firm, Howze worked on the City of Detroit audit engagement.

Lisa Howze has made crime, education, housing, jobs, mass transit and neighborhood stabilization key parts to her campaign. More information about her is available on her campaign web site. I am pleased to join the Detroit Free Press in endorsing her.

Charles Pugh for Detroit City Council

I met Charles Pugh for the first time on May 18, 2005, which was the day that the City of Detroit decided to demolish the historic Madison-Lenox Hotel and replace it with a parking lot. I was the local press contact for the historic preservation groups, which meant that it was my job to remind everyone that there were developers ready to redevelop the hotel, creating jobs and tax revenue in the process. (There is more from that fateful day over on my personal blog.)

I also got to remind everyone that the City of Detroit had recently falsified the inspection reports for that hotel. They argued that the building was found to be in eminent danger of collapse when, in truth, their own records showed that the building hadn't even been inspected.

Charles Pugh was one of the reporters who got the importance of the story. He seemed to understand the value of not only preserving a piece of Detroit's cultural identity, but the importance of jobs and tax revenue that a reborn hotel can create.

Of course, it didn't stop there. When Detroit Synergy launched its Shop Detroit project to encourage people to discover some of the retail options that exist within Detroit, Charles Pugh went out of his way every year to make sure that the project got the media attention that it deserved.


Charles Pugh is also one of a handful of individuals who never let his celebrity status get to his head. Over the past few years, I have seen him on several occasions on Riverfront downtown or at one restaurant or another. He is one of the most approachable people around; always willing to listen to anyone who wants to talk - regardless of whether they're happy or upset with him.

He takes that experience as a reporter and a lifelong Detroit resident into the campaign with him. He has made crime and police response time key issues in his campaign as well as taxes, mass transit and economic development. You can read more about his platform here.

It's for all of these reasons that I join the Detroit Free Press, the Detroit Regional Chamber, the Metro Detroit AFL-CIO and others in endorsing Charles Pugh for Detroit City Council.

WCO Mayoral Forum

The Warrendale Community Organization will host a forum for the various Detroit Mayoral candidates on Saturday, January 17 from noon until 3 p.m. This forum will happen in the gymnasium at St. Thomas Aquinas Church, which is located at 5780 Evergreen in Detroit's Warrendale neighborhood.

The first hour will be an informal meet and greet, where residents will have a chance to talk with all of the candidates on a casual basis. There will then be a moderated discussion of the issues beginning promptly at 1 p.m.

In the interest of time, the executive board of the WCO decided to only invite five of the eighteen candidates. A vote was taken at the WCO's annual holiday as to which five candidates should be invited. The membership decided to invite:

• Dave Bing;
• Ken Cockrel, Jr.
• Warren Evans
• Freman Hendrix
• Nicholas Hood, III

Each of the candidates will be asked a series of questions that were prepared by a committee of WCO members. After that, the floor will be opened for questions from attendees.

This forum is free and open to the public.