Although the deadline is a little later this year, April 18th, thanks to the weekend, we are still getting a bit close for comfort. This is especially true for homeowners who, rather than taking the easy deduction, generally prefer to save a bundle by taking the complicated path of itemizing their deductions instead. If you haven’t filed your taxes yet, don’t panic! You have some options. So here are some last minute tax tips for homeowners that will save you some cash.
Form 1098
This form is also known as the Mortgage interest Statement, and it is sort of like your home’s W-2. Basically a one-stop shop for you 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. Single people can deduct the full interest up to $500,000. For married couples filing jointly, the limit is $1 million.
- 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.
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, might just deduct these two and call it a day.
File an Extension
Despite what you might have heard, it is totally simple and penalty-free to file for an extension, which will get you six additional months to get your taxes in order. However, the IRS still requires you to pay your estimated tax bill by April 18th, or else you will 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 are 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 is 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.
What if you need an extension because you can’t pay your tax bill? It is still better to file for an extension with fuzzy numbers than not to 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 potentially an audit.
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 prepper 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 to plan to minimize the next year’s taxes. All in all, that may add up to the best few hundred bucks you have ever spent.
Remember to Prepare Next Year
This year you waited a little too long and stressed yourself out. If you don’t want a repeat next year, now is the time to start next years tax prep. So before you do any home maintenance or upgrades, research whether there are any tax deductions you could be eligible for.
