It’s heeeere: tax time. Although the deadline is a little later this year (April 18—thank you, weekend!), we’re still getting a bit close for comfort. This is especially true for homeowners who, rather than taking the easy-peasy standard deduction, generally prefer to save a bundle by taking the complicated path of itemizing their deductions instead. But if you haven’t filed yours or even thought about it yet, don’t panic! You have options. Here are three last-minute tax tips for homeowners that will save you plenty of money, headaches, and more.
Tip No. 1: Grab Form 1098
Form 1098, or the Mortgage Interest Statement, is sort of like your home’s W-2—a one-stop shop for your two biggest tax breaks, which are sitting in plain sight on this form.
- Mortgage interest: “The biggest real estate tax deduction for most people will be the interest on their home loan,” according to Patrick O’Connor of O’Connor and Associates. Single people can deduct the full interest up to $500,000; for married couples filing jointly, the limit is $1 million. (Here’s more on how your mortgage interest deduction can help you save on taxes.)
- Property taxes: This is the second-biggest deduction for most homeowners. According to the U.S. Census Bureau, the average household property tax is $2,127. (Here’s how to calculate your property taxes.)
Even though you might be eligible for other real estate–related deductions and tax credits, these are the biggies for most people. If you’re down to the wire on filing, you might just deduct these two and call it a day.
But wait, there’s more!
Tip No. 2: File an extension
Despite what you might have heard, it’s totally simple and penalty-free to file for an extension, which will get you six additional months to get your taxes in order. But don’t get too excited; the IRS still requires you to pay your estimated tax bill by April 18, or else you’ll pay interest on what you owe down the road.
The IRS makes it easy to file for an extension, either online or by mail. On the form, just estimate how much tax you owe. If you’re filing an extension because you need more time to figure out your itemized deductions, one easy shortcut is to just pay the standard deduction now—or the same amount you claimed last year. All in all, it’s better to overestimate what you owe, because then you won’t pay any interest. Once you file for real, anything you’ve overpaid will come back to you.
But what if you need an extension because you can’t pay your tax bill? It’s still better to file for an extension with fuzzy numbers than to not file at all. The IRS has payment plans that can help if you are short on cash. Just file something—blowing the deadline entirely will open you up to penalties as well as interest on your bill. And maybe an audit, too.
Tip No. 3: Hire some help
If you make less than $64,000 a year, you qualify to use free tax prep software from the IRS. Even if you make more than that, there are lots of free or low-cost online tax prep options that should work for anyone with relatively straightforward taxes.
Of course, another option is to find yourself a good accountant. If paying for a tax preparer sounds extravagant, keep in mind that, according to the U.S. Tax Center, the average cost of getting your taxes done is only $261. This, generally speaking, is money well-spent.
A good accountant can actually save you money by spotting deductions you might not have found on your own, and helping you plan to minimize the next year’s taxes. All in all, that may add up to the best few hundred bucks you’ve ever spent!
Another timesaver: Rather than snail-mailing your accountant your tax forms, snap pictures of them on your smartphone; certain apps like CamScanner can do so with scanner-style quality. Accountants don’t need the originals to file.
For next year, remember to prepare
OK, so this year you waited too long and stressed yourself out. If you don’t want a repeat ordeal next year, now is also the time to mend your ways and start tax prep early. Nobody wants to be thinking about taxes all year, of course. But as a homeowner, you can do some things to be better prepared.
So before you do any home maintenance, upgrades, or renovations, research whether there are any tax deductions you could be eligible for. Start now, and you’ll be sitting pretty to collect on all the various tax perks that come with owning a home rather than pulling out your hair at the last minute.
The post Don’t Panic! 3 Money-Saving, Last-Minute Tax Tips for Homeowners appeared first on Real Estate News & Advice | realtor.com®.
Author: Audrey Ference
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