April 15th is coming up fast, and if you haven’t finished, or even started your tax returns, you need to get up and get on it! Nobody likes doing taxes, really. It can be a complicated and stressful chore, if you don’t know what you’re doing. If you’ve been putting off doing your taxes, or didn’t get the returns you hoped for, here are five deductions you might have missed or may want to get started on for next year. These are for homeowners only!
- Mortgage interest. This is the biggie, and there is absolutely no excuse for missing this one. In the early years of your mortgage you end up paying more in interest than you do in principal, so this can pay you back big. The mortgage interest deduction extends to second mortgages, refinancing, home equity loans up to $100,000, and home equity lines of credit up to $100,000. This deduction does not extend to homes that cost in excess of $1 million, and it only partially covers those who raise their mortgage debt above their home’s market value. Home improvement loan interest is also tax deductible.
- You can’t deduct your Fort Lauderdale Homeowner’s Insurance unless you are using a portion of it for business or as a rental. You can, however, qualify to deduct your private mortgage insurance, FHA, or other mortgage insurance premiums subject to some criteria.
- You can deduct your property taxes, including those you pay up front with the purchase of your home. If you have an escrow account, which means the lender pays your taxes from the money put into the account, your lender should send you a 1099 to show how much you’ve paid for the year. Otherwise you may get a tax bill directly from the city and county, depending on your state, county, and municipality.
- Energy tax credits can help you save on more than just the power bill. Installing home solar panels, wind turbines, fuel cells, geothermal heat pumps, and solar water heaters can bring you bigtime money, including 30 percent of installation costs.
- The home office deduction is tricky, and trips a lot of people up. Your home office is deductible if it is your primary place of business, and only then. It can be a room in your house, a workshop, studio, barn, but it can only be used for conducting your business, and not as a secondary workplace for another employer.
No matter how you do your taxes, we do recommend that you see a CPA, or at least make use of a top-shelf tax program like TurboTax. If you have a complicated return, and are not sure what deductions you qualify for, we urge you to contact a qualified CPA and start getting your finances in order. After all, getting your taxes done by a CPA does cost a little more, but an audit and penalty can cost a lot more than that.