Tomorrow marks that time of year that is commonly known as tax season. As a Henderson real estate agent, part of my job is educating members of my community about all the benefits that come with being a homeowner, and getting certain tax deductions is only one of them. For many Henderson, KY homeowners, doing your taxes is difficult enough without factoring in all of the tax benefits. The complicated ins and outs of homeowner tax breaks can result in costly errors that will drive the IRS to your doorstep if you don’t take the right precautions and carefully calculate each deduction.
As with all complicated processes in life, some mistakes are more common than others. In order for you to see all the tax benefits that come with owning a Henderson, KY home, I thought that I’d outline some of the more common mistakes homeowners make on their tax returns:
Deducting the wrong year for property taxes is a common error for many a homeowner in Henderson, KY. In order to avoid this mistake, write down the amount you actually paid for 2011, no matter what the date is on your tax bill. The reason for this is because some taxing authorities work a year behind, and this tactic will help you avoid confusion with the feds.
Don’t confuse escrow for actual taxes paid. Many homeowners have their lenders escrow funds to pay their property taxes. Don’t just deduct the amount escrowed. Instead, deduct the regular amount on your tax bill. Your lender may not have collected an amount that matches the amount on your tax bill exactly, so use the number on the statement sent to you by your lender.
Many Henderson, KY homeowners fail to track all home-related expenses. File away all of your home repair, home maintenance and home office expenses as you go throughout the year. This will help you account for every possible expense and ensure accuracy on your tax return. I understand that documents can be hard to keep track of, so starting a folder early on each year will help you keep this paperwork organized and ready for when you sit down and start filling out your tax forms.
File all of your energy tax credits correctly. If you made any eligible, energy-efficient improvements to your home, you need to make sure that you fill out Form 5695 on your tax return. This will offer a 30% credit towards upgrades such as insulation and windows. Make sure you read the instructions carefully on both parts of the form, as it can be easy to mix up the numbers on this incredibly complex form. Pick a quiet place and stay focused as you fill this part out. It can be tricky, but it’s also well-worth it to get the tax breaks!
Part of being an experienced and knowledgeable Henderson real estate agent is learning the ins and outs of homeownership and the benefits that one can receive from buying a home. One of the best benefits of being a homeowner in the Henderson, KY area is the many tax deductions that you can receive on your annual return. If you avoid these common mistakes, I can guarantee that you’ll get the most benefit out of these tax breaks each year! It’s just a matter of going through each step carefully and making sure that you don’t overlook anything.