Wednesday, June 19, 2013

Under-water Mortagage

Q.  I have a motor home which I am selling, but owe more than the selling price. I will have to write a check for about $20,000 to pay off my loan.  I have been deducting the mortgage interest as a second home and the license fees. When I file my tax return, can I take the $20,000 as a deduction?

A.  Regrettably the $20,000 won't be deductible. This is true for any personal asset, including a residence, primary or not. Sometimes there just isn't any justice in our tax code. Sorry to be the bearer of bad news.

Monday, June 17, 2013

Travel for Volunteer Work

Q.   As full timers, we travel from our home state in TX to various locals around the US doing volunteer work. Even though RVers are classified us as itinerants, it would seem we should be allowed some deduction for traveling from one site to another, which oftentimes is a considerable distance. Can we count the non-vacation aspects of the travel as a deductible expense?

A.  Your point is well taken, and as much as I would like to say to go for it, I doubt under examination if it would be justified. Once at the site, driving errands or people around on behalf of the charitable organization would classify as charitable travel, and you should keep track of these miles. If I learn otherwise, I will certainly post an update on this site. Thanks for all your good efforts and keep up the good work!

Finding the Right Sales Tax Table

Q.  Although our official residence is Texas, it occurred to me that with our travels, we may be able to take advantage of sales taxes in the various states we actually stay in. Other than keeping the receipts (which I dislike), what are our best options?

A.  Without keeping receipts, you can try 2 different approaches: (1) Use the sales tax tables for Texas. As TX is a no personal income tax state, their sales tax rates are higher than many states, and this might work nicely for you. (2) The IRS Worksheet for multiple moves  is another option. You can use the higher of the two without any problem.