3 New Homeowner Tax Mistakes To Avoid
It's that time of year again; time to file your taxes. You may or may not be happy about that but there are two things that are always going to happen, death and taxes. On a not so morbid note, let's look into a few homeowner tax mistakes that folks typically make so that you can be sure to avoid them.
Many times when folks purchase a home that needs a lot of renovations, they forget to keep the receipts for these renovations and take advantage of them at tax time. Some home renovations can be a tax write off. If you do such things as installing energy-efficient features into your home you need to be sure to take these as a tax right off. There are some home improvements that will not qualify as a tax deduction but they will still be helpful if you ever decide to sell your home.
- If you have been a home renter for many years, you may have been able to file a very easy tax form known as the 1040ez. Do not make the mistake of thinking you can continue to file this simple form for taxes once you purchase your own home. It may be to your benefit to talk to a tax professional about what all you can deduct once you become a homeowner and what forms to use. You may in fact want to just hire a professional to make sure that your taxes are done correctly and save yourself a lot of worry.
- Be careful not to list your full escrow amount on your taxes. Many homeowners try and list their full escrow balance on taxes. You may be surprised to find that if you are a homeowner not all of your funds in escrow are used to pay taxes. Again, hiring a tax professional may be in your best interest at least for the first year after becoming a homeowner. Why have unnecessary stress when you can let someone who knows what they are doing take care of your taxes.
- You may find this surprising but many folks file their new home on their tax forms in the wrong year. Remember that taxes are a year behind. If you purchased your home in the first part of 2015, you do not need to include it in your tax return this year because you are filing 2014 taxes. You can actually end up filling the wrong amounts if you make this mistake and that can lead to less of a refund than you had anticipated.
Hopefully these tips will be helpful to you this tax season. If you haven't yet filed your taxes, go ahead and do so to avoid having to file extensions. Better to get it all out of the way and enjoy whatever 2015 is going to bring your way and stop worrying about your taxes so that you can enjoy your new home!
Information courtesy of Huntsville AL Realtor Mike Manosky.