Accountants Say You'll Probably Make These 6 Homeowner Tax Mistakes
Hooray - it's tax time! OK, few people get quite that excited about filling out government forms, but there's good reason to appreciate the annual ritual. Tax deductions are a serious perk for homeowners, and they can be a major boon to your family's finances.
But unless you're a CPA, it can be easy to miss these deductions, or worse: raise a red flag with the IRS because you got deduction happy. Here are the top six homeowner tax blunders accountants see the most.
1. Missing the Mortgage Interest Deduction
Itemized deductions can be a great way to lower your tax bill. But homeowners, particularly newbies, may be used to claiming the standard deduction because they haven't had enough of the expenditures that qualify them for itemized filing.
You can deduct the interest portion of your mortgage payments. That might mean your itemized deductions will now exceed the standard, saving you tax dollars.
2. Assuming Everything House-Related is Deductible
Deductions are great, but you can't write everything off on your taxes. And to stay in the good graces of the IRS, you don't want to over-deduct.
Talk to your accountant or tax preparer to be straight on allowable deductions, which, for a homeowner, generally means mortgage interest and real estate taxes. You may also deduct points charged on the mortgage in the year you purchased the home.
3. Neglecting Your Home Office
Many people fail to take the home office deduction for fear of being audited, or because it's just plain hard to calculate if you don't use the newer, simplified method. (More on that math-saving gem later.) However you compute this deduction, it's a great way to save some cash.
To qualify for the deduction, your office space must be used regularly and only for business. If you work for someone else, says Hardy, there has to be documentation - it could be an email from a supervisor - that your work at home is required as part of the job and is for the employer's convenience. In addition, employees can't take the deduction if they rent any part of their home to their employers and use the rented portion to perform work for the employer.
To see more tax deductions you may miss,