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401(k)s and 2441s A Reply from a Tax Pro to last week's comments on these two questions: » From: Los Altos, CA Dear TaxMama, RE: Paying Yourself? [Interest on a 401(k) plan] A 401(k) plan loan to buy a house also has to meet the security test to qualify as home mortgage interest expense, i.e. it must be secured by a recorded deed of trust or recorded mortgage on the purchased residence -- see PPC Key Issue 29H (IRC Sec 163(h)(3) Temp. Reg 1,163-10T(o) &(p) RE: Caring for My Wife Your answer to Don regarding a caretaker for his disabled wife is not clear as to which form is annoying -- I assume you mean Form H but it looks like you mean Form 2441 which you do not want to discourage him from filing. Nikki Sandars American Express Tax and Business Services Los Altos, CA 94022 Hi Nikki, Many thanks. You're 'right on' about the 401(k) loan. And yes, I do mean the Schedule H. The Schedule H is a great deal of trouble for the average taxpayer. They don't tend to realize that they must also file state payroll forms and W-2s by January 31st of each year. So, inevitably, they get into trouble. I understand that Congress wants to ensure that homeworkers pay taxes on their income, but surely, there must be an easier way for people who don't have a business to deal with this. Sigh. Best wishes, Eva Rosenberg Your TaxMama

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