Believe it or not, today is the last day of 2020, which means it’s time to start the search for a trustworthy online CPA firm. We already have our sights set on Tax Day 2021! One of the biggest mistakes we see our clients make is waiting until the last minute to start their taxes. We’re not suggesting that you put the champagne down — by all means, enjoy the holidays! But we are saying that thinking about your taxes early is a strategic step in saving money, plus it reduces your stress.
Using a CPA online is extremely common, but it does come with some risk. When you use an online CPA, it’s harder to know if they’re the best. Of course, we’d love to help you through Tax Day 2021, but what’s more important to us is that everyone finds a CPA they can trust. We’re going to help you find the best online CPA for tax season.
What’s an Online CPA
First, let’s define an online CPA. When you hear the term ‘CPA,’ you might get a vision straight from Hollywood: think dusty, smokey old accountant offices. Or if you’ve used an accountant before, maybe you just think about offices and endless paperwork. In today’s modern world, we look and operate a little differently.
Many people assume only programs like TurboTax and H&R Block are online CPAs, but any accountant can put their services online. That’s how we serve individuals and businesses from all over the country and expats abroad. We also serve first-time homebuyers who use programs like the MCC tax credit. This program can be complicated with paperwork like Form 8396 and PHFA 1098, but we can help anyone in any state navigate their taxes.
Step #1 — Check Prices
We get it — TurboTax and H&R Block offer low prices. It’s tempting, for sure. But the problem is that these advertised prices aren’t always the final cost of their services. What if you have a question or need extra help? Usually, you must pay more or upgrade to talk to a human. And when it comes to filing your taxes, you want to be 100% sure it’s correct.
As an online CPA, we want our prices to be affordable to the masses. That’s why we match the cost of TurboTax’s Deluxe version with state filing. But, we also throw in essential amenities like human voices, helpful phone calls, and constant support.
Step #2 — Find an Online CPA That’s Familiar with Your Situation
If you have a complicated situation, you need to use an online CPA who knows what they’re doing. If you have multiple businesses, then look for an accountant who specializes in business taxes. If you have property or income overseas, don’t settle for the typical online programs. You need an expert.
Here at our CPA firm, we specialize in numerous types of situations. But, what we’re most known for is the MCC tax credit program. So if you’re a first-time homebuyer and you need help understanding complicated paperwork like the PHFA 1098 (the mortgage interest statement you’ll receive in Pennsylvania), then you know we can help.
Of course, we’re not the only ones who can assist first-time homeowners, so the point is to seek out experts and receive the best help. And if you're out of Pennsylvania, remember that we serve anyone across the country, as do many other online CPAs.
If you use an accountant who doesn’t understand your situation, you could miss out on saving money or receiving a larger tax return. Let’s look at the MCC tax credit as an example. With this program, you can save up to $2,000 per year, but it’s complicated. So if you’re using a CPA online who doesn’t understand how to receive the most tax credit possible, that’s lost money.
If you’re a first-time homebuyer, then an expert accountant should be able to tell you that the MCC tax credit requires certification before you buy a house. And, they should tell you that you need to use paperwork from your state’s specific agency. In Texas, you’ll use TDHCA MCC (Texas Department of Housing and Community Affairs). In Pennsylvania, you’ll use the PHFA (Pennsylvania Housing Finance Agency). And when you receive the PHFA (or the one from the TDHCA MCC program if you’re in Texas), then you need to use the information on that form to submit Form 8396 with your annual taxes.
If that all sounds confusing, it’s only because sometimes you need experts to navigate these programs and save you the most money possible.
Step #3 — Feel Comfortable with Your Online CPA
Above all else, you need to feel comfortable with your accountant. Unfortunately, people use programs like TurboTax because they think CPAs are more expensive and not as trustworthy. We’re trying to break that stereotype, and we’re not the only ones out there. So use your gut. If you get a bad feeling about using a specific CPA online, then take your business elsewhere.
Here are some other tips on how to find honest and trustworthy CPAs:
If You Need More Help, Let Us Know!
Again, we’d love to help you with any of your needs this upcoming tax season. Not to scare you, but Tax Day 2021 is just (gulp) 105 days away! If you start thinking about your taxes within the next few weeks, you’ll be in good shape. We pride ourselves on being an honest and trustworthy online CPA; but, again, we just want you to get the help you need. If we’re not the right fit, we’re happy to recommend someone local to you or an accountant who better specializes in your particular situation.
Contact us — we’re here to help!
It’s hard to believe that 2021 is right around the corner, but with a new year approaching, many people wonder if there’s a perfect or best time to buy a house. Although there is an answer to this question, it’s one of those things that may not be the same for everyone. So if one of your New Year’s resolutions is to finally be a first-time homeowner (or upgrade your home), then read on to discover when to make a move.
Money, Money, Market
If you’re asking this question, then you’re probably trying to save money. By determining the best time to purchase a home, you’re searching for deals, discounts, and when the market is right. These factors are part of the reason why the answer can change for each person individually.
Because the housing market can fluctuate, there is no exact day when you should send in that offer. But you can monitor the market to decide if the factors are in your favor. Here’s what to look for:
Late Summer, Early Fall
If we had to pinpoint an exact date, it would be in that sweet spot mentioned above:
January - March
The start of the year is not the ideal time to buy a house. Inventory is usually at its lowest point at the end of a calendar year and through the following spring. The end of the year is tax wrap-up season. This year, as people start to anticipate Tax Day 2021, they aren’t looking to add any complications to their financial situation. And with colder weather, it’s more challenging to attract the attention you want to your home.
April - July
Let’s pretend that we’re looking at next year. (Keep in mind that 2020 and subsequent years may show different trends.) As temperatures rise and Tax Day 2021 passes (phew!), people will start preparing to sell their homes. Buyers who receive tax returns are ready to invest, and open houses are a lot easier in drier, warmer weather. Hence, early summer tends to be the busiest season and when most people list their homes. May, June, and July tend to be the months with the most extensive inventory. Now is an excellent time to start browsing for homes.
August - October
But remember: Just because inventory is high doesn’t mean prices have started to drop yet. The stock needs to reach its peak, which tends to be late June or sometime in July. Once that peak passes, the supply is too high to warrant high prices, and costs will decrease. This is the sweet spot. So if you’re asking when is the best time to buy a house, this is it.
November - December
Similar to the start of the year, November and December are when inventory drops to the point where house prices increase again. If you’re in the market for a new home at this time, consider waiting until the following year to do so. However, because it’s the last couple of months of the year, it’s worth a look because some sellers may reduce prices before the tax year ends. And this year, many are anticipating Tax Day 2021 in just a few months.
Is There a “Best” Time to Buy a House?
As you watch the market trends, you’ll know when to pounce on that dream home. If next year follows a similar path, it’s best to wait until late summer or early fall or inquire about houses at the end of the calendar year. But no housing trend truly matters if you cannot afford to be a first-time homeowner or upgrade your home.
Your Financial Situation
Before you mark August 1st on your calendar, take a moment to consider your financial situation. The real best time to buy a house will be when you can afford it. There are a few steps that can help you determine when you’re ready:
First-Time Homebuyer Programs
At our CPA firm, we help first-time homeowners through a program called the MCC tax credit. This is a federal program monitored by each state individually. When it comes to first-time homebuyer programs, this is one of the best. And although it mostly serves those purchasing their first house, other groups can still qualify for the benefits.
For the MCC tax credit, you’ll need to file all paperwork before you purchase your home. More importantly, you’ll need to work under the regulations of your state. For example, if you reside in Texas, you’ll file paperwork under the TDHCA MCC program (Texas Department of Housing and Community Affairs). But the TDHCA MCC is only for those in Texas. If you live here in Pennsylvania, you’ll work with the PHFA (Pennsylvania Housing Finance Agency) and need to request a PHFA 1098 form (more on that below).
Although our CPA firm is in Pennsylvania, we work with individuals across the country and even abroad. If you have any questions about this program or any of the necessary forms, please ask! Some of the paperwork you’ll need to file Form 8396 with your taxes. To obtain the required information, make sure you receive your Mortgage Interest Statement. In Pennsylvania, you’ll receive the PHFA 1098, which gives you the amount of interest you paid on your mortgage loan. (This information is how the state determines how much you’ll receive with the MCC tax credit.)
Don’t Forget to Enjoy the Process
Buying a new house can be stressful. Especially when you read all about these TDHCA MCC and PHFA 1098 and 8396… There’s a reason why there are professionals out there to help you. Find an excellent lender, a supportive real estate agent, and a helpful CPA firm. They’ll assist you through the entire process that you can also enjoy this time in your life.
To help save money, research first-time homebuyer programs and other state programs for anyone looking to purchase a new house. Allow this time to be exciting. And if you need any help from us, don’t hesitate to reach out!
When buying your first home, it helps to think about it as one large project with several moving parts. To have success throughout the process, you must plan, organize, and strategize your goals. If saving money is one of them, that intention should drive your strategy. You can accomplish this by focusing on helpful first-time homebuyer programs, as an example. But if speed is more critical, then organizing and filing any necessary paperwork is crucial.
Although buying a house as a first-time homeowner is an individual experience, everyone can follow a few essential steps. Regardless of your goals or priorities, the following five actions will help you start the process, prepare for paperwork, and save money.
#1 Start Saving Early When Buying Your First Home
At our online CPA firm, we stress the importance of starting early when buying a house, especially as a first-time homeowner. Purchasing a second home while selling your first can make a big purchase more manageable. But when starting from scratch, the earlier you begin saving, the better.
There are a few different strategies for saving money when buying your first home. Again, think of this step as a project and look at the smaller parts. There are three main expenses: down payment, closing costs, move-in expenses.
Down Payment (DP)
Your down payment cost will depend on the type of loan and mortgage you determine with your lender. Luckily, several first-time homebuyer programs can help you lower the percentage of your down payment. A past blog article explores these programs in each state. Some can bring your DP to as low as 3-5%.
To determine the final figure, use a down payment calculator or use the following formula:
DP% x Cost of Home = Down Payment
So if your DP is 5% and your home’s cost is $250,000, then your savings goal is $12,500. Many find it helpful to open up a savings account specifically for buying a house and establish automatic transfers. If you can save $1,000 per month, then you’ll afford your down payment in a little over one year.
Other First-Time Homebuyer Programs
Saving money when buying a house is often a big goal. While each state has several first-time homebuyer programs to support you (if you are, indeed, a first-time homeowner), others can help reduce costs. One is called the MCC tax credit program. Here at our CPA firm, we specialize in this program and help you save up to $2,000 per year.
The MCC tax credit is a federal program, but you’ll work with your state to determine how much you can save. For example, the MCC mortgage credit certificate in Texas is specific to those buying a house in that state. Here in Pennsylvania, you’ll adhere to the rules for our particular state.
If you want to benefit from these types of first-time homebuyer programs, then it’s essential to get started early. You must submit all paperwork before purchasing your new home. To learn more, you can read about the MCC tax credit on our website, and we can help you navigate the process.
But if you want to know the terms for your state right now, try a little search. In Texas, just search ‘MCC mortgage credit certificate Texas.’ Change the search terms for your state. 'MCC mortgage credit certificate New York,' 'MCC mortgage credit certificate Hawaii,' etc.
Closing costs are small fees or other expenses that you must pay when finalizing your home purchase. Most first-time homeowners should plan on 5% of their loan for closing costs. So, again, if the price of your future home is $250,000, you’ll need to save an additional $12,500. But there are some ways to lower this expense, the most common being negotiations with the seller or assistance programs.
Don’t forget this expense! After you purchase your home and pay closing costs, you’ll still need some money to physically move into your new home or address any issues such as home repairs or essential upgrades. Many first-time homeowners also need furnishings for their new house, such as beds, sofas, tables, chairs, etc. Factor these purchases and expenses into your savings goal.
#2 — Increase Your Credit Score
Another significant factor in determining your home’s cost (especially your down payment) is your credit score. You can quickly look at your credit online to see where your score falls. It’s best to search all three main credit bureaus: Experian, Equifax, and TransUnion.
Although your score with each will be similar, check for errors and dispute anything that harms your credit score. This is standard practice — don’t be scared to pick up the phone and ask questions. Staying on top of your credit is one of the best ways to increase your score.
Other things that can help you bolster your credit score when buying your first home:
#3 — Be Choosy and Shop Around
It’s tempting to react when you find your dream home, but if the market allows, be choosy and take your time. (Note: sometimes the housing market is competitive, and you must act swiftly once you find the home you want to buy.) If you have your heart set on a specific neighborhood, expand your parameters, and shop around.
The MCC tax credit program, as mentioned above, is an excellent example of why looking at other neighborhoods is helpful. Sometimes, governmental programs offer perks when buying your first home (or second) in specific areas. Maybe it’s an up-and-coming district that needs a housing boost. Perhaps it’s a neighborhood that the city wants to turn more residential, so it’s offering discounts to families willing to move. There are many reasons why a specific area may offer more affordable housing.
Ask yourself the following questions:
#4 — Open Houses are Your Best Friend
A lot of first-time homebuyers feel intimidated by open houses. When you’re in a room filled with others who might want the same place, all of a sudden, the process turns competitive. If you use these open houses to your advantage, then you’ll start to see the value in them.
Here are a few perks of open houses:
#5 — Secure Pre-Approval
Although pre-approval letters aren’t required, they show the right people that you are a serious first-time homebuyer. Mortgage pre-approvals are a lender’s offer of your future home loan. A letter like this shows real estate agents or private home sellers that you’re worth their time and investment because they know you have the funding.
Obtaining pre-approval can also give you an edge over your competitors. Not only do they know they can trust your finances, but they also label you as a responsible and trustworthy person. This reputation can also give you a little pull when it comes to negotiating. Yes, governmental programs like the MCC tax credit are helpful, but sometimes you can shave the most off an asking price by merely negotiating. Here are some things you can ask the seller to reduce:
As always, when the going gets tough… Give us a call or schedule a consultation online! You don’t have to navigate this process alone. We can help you maneuver the MCC tax credit process and find other resources as a first-time homeowner.
It’s the end of 2020, and we all know what that means: tax season is just around the corner! As we prepare to ring in the new year, we’re also planning how to tackle our taxes. But you don't have to wait until the clock strikes midnight – you can get started on your tax paperwork as soon as you want. Take it from us: many opt to wait until the last minute, but that can cause unnecessary stress.
For many, tax season is simple because you don’t have any particular or complicated situations. But for others, there are business expenses, dependents, charitable contributions, and first-time homeowner paperwork to consider. Even one of these items can make your taxes more complicated.
At our CPA firm, we help people across the nation navigate their taxes, and we can help you, too! We specialize in the MCC tax credit and help new homeowners understand some of these first-time homebuyer programs, but we also help people with any tax question or need. In the meantime, read about these five ways to prepare yourself for tax season so you can feel successful, even when asking for help.
#1 — Anticipate Tax Season
This one is relatively obvious, but the more you anticipate the start of tax season, the better prepared you’ll be. That means having a system in place that’s easy to use throughout the year and anticipates your specific tax needs, such as:
#2 — List All Income & Potential Deductions/Credits
Have you ever sat down to start your taxes and realize you have no idea where to begin? (See #1 for a little organizational help.) Your go-to point is income, even if you’re organized. If you only have one job, you may be saying ‘huh?’ and wondering why we’re talking about multiple income sources. Besides having various positions, there are other sources of income to consider, such as mutual funds.
When it comes to these alternatives, there’s often a paper trail requirement. As you make your list of income sources, start organizing your tax forms. Any sort of income should accompany a tax form to make it easier for you.
Deductions & Credits
Likewise, keep track of your deductions and credits. Typical types include student loan interest payments, dependents and child tax credits, earned income, charitable donations, MCC tax credit, etc. By creating a list, you’ll start to think about anything you need to support this step. For example, if you’re using popular first-time homebuyer programs like the MCC tax credit, then you’ll need to file Form 8396 with your taxes.
#3 — Consider Making a Charitable Donation
If you can, consider making a charitable donation before the end of the year to offset the amount of income taxed. Philanthropic gifts are trendy at the end of the year for a reason — the end of tax season sneaks up on us in December!
But although it may seem like a loophole, there’s a reason why these donations receive deductions. Charities need funding, and by donating to a cause that’s important or near and dear to you, you’re not only supporting vital work, but you’re also receiving an incentive. A tax deduction incentivizes many charitable contributions each year, and that can be a wonderful thing.
#4 — Consider a Contribution to Your Retirement Plan
Much like making a last-minute charitable donation to reduce the amount of taxable income, contributing to your IRA or retirement plan works in the same way. Many of these plans allow you to contribute funding without being taxed on that income. However, you’re often taxed later on when you use that retirement money. But for the time being, it’s a great way to hold onto your income without having to pay taxes yet. Plus, you’re preparing yourself for retirement, and that’s also very important.
#5 — Schedule an Appointment
Lastly, get your CPA appointment on the calendar as soon as you can. Although user-friendly online programs like TurboTax make waiting until the last minute kind of doable, it’s never advised (plus, they cost more than our one-on-one personalized services). You don’t know what your taxes will look like each year, so it’s essential to start thinking about them early.
At our online CPA firm, we help people navigate the complexities of first-time homebuyer programs like the MCC tax credit and assist clients in many other ways. Anything related to taxes and tax season is our specialty, as well as:
By following these five tips, you can feel prepared for tax season, file correctly without worrying about audits, and save more money by finding all the credits and deductions possible.
The MCC tax credit is an excellent incentive for those who fall into the definition of a “first-time homebuyer.” We all know that buying your first home is both exciting and stressful. But most importantly, it’s expensive. To make it happen, many Americans require help in the form of financing, loans, and incentives, all pieced together to create a semi-complicated financial puzzle.
We understand that the home-buying process’s ins and outs can be confusing, especially when it comes to tax time. That’s why our CPA firm Sickler, Tarpey & Associates helps those navigating these challenges through tax season. We also specialize in the MCC tax credit and help numerous people obtain this generous perk every year. If you want to save a significant amount of money on your first home, then read on to learn how you can qualify for the MCC tax credit.
What is the MCC Tax Credit
If you’ve been following along with us, you know we are the go-to resource for the MCC tax credit. You probably already know what it is, but let’s give a little refresher for those who are new readers.
To summarize, it’s a tax incentive that helps “first-time homebuyers” save money by crediting a percentage of the interest they pay on their mortgage each year. Each state operates a little differently, so those living in Texas will follow the rules of the TDHCA MCC (Texas Department of Housing and Community Affairs). In contrast, those in our home state of Pennsylvania will follow those set by the PHFA (Pennsylvania Housing Finance Agency).
You can qualify for 10-50% credit on the interest you pay on your mortgage in your state. The percentage depends on the amount of your loan — larger loans receive lower rates where small loans generally receive higher percentages.
For example, with the TDHCA MCC, most first-time homeowners qualify for 20-25% of the interest paid. That means if you spend $1,000 of interest on your mortgage, you will receive a tax credit of about $200-250.
Although that may not seem like a lot, consider the savings when you multiply that amount for the entirety of your loan. The maximum amount you can receive as a tax credit is $2,000 annually. For a 30-year loan, that’s up to $60,000 in savings.
Non-Refundable Tax Credit
It’s important to remember that the MCC tax credit for first-time homeowners is non-refundable, meaning that it can only reduce the amount of tax owed rather than work as a tax refund. If you owe a lot of tax each year, this incentive is excellent. But if you tend to owe little to no tax, it may not be worth it to you. However, if you’re anticipating a year when you owe some tax, it’s still one of the best first-time homebuyer programs out there. Plus, you can always “carry forward” to the next tax year.
How to Qualify for the MCC Tax Credit
Now that you’re fully aware of the incentive let’s look at how to qualify. The key is in the description as a first-time homebuyer tax credit. That means, yes, you must be buying your first home unless you fall into one of the three exceptions:
Maybe it’s not your very first home, but let’s say you haven’t owned a property for over three years. In that case, time is reset, and you’re considered a “first-time homebuyer” once again. Same for those purchasing a house in a specified area designated by the Department of Housing and Urban Development (HUD). These homes usually fall into more rural or impoverished areas that could use a housing boost. Therefore, the “first-time” is waived.
And if you’re a veteran or an active military, you can also benefit from this incentive at any time. Even if you’re buying your second or third home, you can still enjoy the perks of the MCC tax credit.
And that’s it! It’s relatively easy to qualify for the incentive; the hard part is filing during tax season. But have no fear — we’re always here to help! Feel free to contact us with any tax-related questions.
Other First-Time Homebuyer Programs
Now that you have a taste for savings, maybe you’re wondering what other programs are out there for first-time homeowners. Well, good on you for thinking about this early! The key to taking advantage of these programs is to be proactive and obtain/file any necessary paperwork before purchasing your home. For some first-time homebuyer programs (like the MCC tax credit), this is a mandatory step.
Aside from the MCC incentive, you can also find state-specific programs that help new or first-time homeowners. Just as the TDHCA MCC serves Texas only, there are many other perks that Texas residents can enjoy. Likewise, those in Pennsylvania can find help from state resources, or those in Hawaii from Hawaii, California from California… you get the picture. A recent blog post goes more into detail, but all you need to do is some research.
And when in doubt, give us a call or send us an email, and we’re happy to help.