Photo Attributed: moneytalksnews.com
Everyone’s favorite season of the year is upon us, tax season. Whether or not you file your own taxes, this time of the year can be stressful for anyone. There are so many different small and large tax breaks that even some tax professionals are unaware of some. If you have recently bought a home, here are a few of the ways you can save and earn more on your IRS refund.
1. Energy Credits
There is a Residential Energy Credit for homes that qualify. This credit can equal up to 30% of the cost of the property. Here is how you can qualify for energy credits. Homes that use solar heating to heat at least 50 percent of their water can qualify, but not homes that use solar to heat pools or hot tub. Also, any property that uses solar for generating electricity. Homes with any fuel cell property with a nameplate capacity of least 0.5-kilowatt hours of electricity generated by using an electrochemical process with an electricity-generating efficiency greater than 30 percent qualify. Homes that generate electricity with a wind turbine, also qualify for a tax credit. Lastly, homes that use the ground or groundwater as a thermal source to heat qualify for energy tax credits.
2. Mortgage interest, insurance premiums and deductible points.
If you obtained a mortgage less than one million, it is fully deductible. Premiums paid for on a qualified mortgage insurance are deductible, if the taxpayer’s adjusted gross income is below $100,000. If the taxpayer makes above $100,000, the deductible is reduced. Points on a home mortgage loan for the purchase or improvement of a primary residence are deductible in the year paid. Also, when you moved and donated old furniture, clothing and other household items, that is also deductible.
3. Moving expenses
If your move was related to work you can get your moving expenses written off. Moving expenses are only deductible for the transportation of household goods plus the travel expenses to the new place. Taxpayers qualify for these deductibles when their new place of employment is located 50 or more miles away from their previous employment. Be ready to submit length-of-employment test and a commencement-of-work test.
4. Home Businesses
If you work from home you may be able to write off some of your office expenses. The deduction is calculated by the square footage of the office versus the square footage of the home. This percentage then is used to calculate the business percent of mortgage interest, real estate taxes, insurance, HOA dues, repairs and maintenance, utilities, etc.
A few commonly mistaken deductibles are homeowners insurance, homeowners Association fees, maintenance and repairs, and utilities.