{"id":2100,"date":"2022-03-21T10:00:00","date_gmt":"2022-03-21T14:00:00","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=2100"},"modified":"2024-04-25T23:18:46","modified_gmt":"2024-04-26T03:18:46","slug":"eleventh-hour-tax-tips-for-homeowners","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/eleventh-hour-tax-tips-for-homeowners\/","title":{"rendered":"Eleventh-Hour Tax Tips for Homeowners"},"content":{"rendered":"\n
\"Tax<\/figure><\/div>\n\n\n\n

Did You Claim Everything?<\/p>\n\n\n\n

It\u2019s that time again. Here, we note 6 checklist items, to help ensure your ducks are in a row for Monday, April 18, 2022 (or Tuesday, April 19 if you live in Maine or Massachusetts).<\/p>\n\n\n\n\n\n\n\n

1.   Do It Online.<\/h2>\n\n\n\n

It helps everyone. \u201cFiling electronically with direct deposit and avoiding a paper tax return is more important than ever\u201d in 2022, IRS Commissioner Chuck Rettig<\/a> has said.<\/p>\n\n\n\n

\u201cThe pandemic continues to create challenges,\u201d notes Rettig. But we can all help smooth out the process.<\/p>\n\n\n\n

To get through its workload, the Internal Revenue Service relies on direct deposit channels to our IRS online accounts<\/a>. We can also use our online accounts\u00a0to check our stimulus amounts. Taxpayers may claim their third stimulus p<\/a>ay<\/a>ments<\/a>\u00a0if they received less than the full $1,400 per person in 2021. Use Form 1040 (1040-SR for seniors). In January, taxpayers slated to receive a third payment in 2021 were mailed Letter 6475 \u2014 recipients can check the letter to be sure the bank deposits match.<\/p>\n\n\n\n

2.   Prepare to Itemize Deductions.<\/h2>\n\n\n\n

The standard deduction is easy enough to claim. It\u2019s even higher for the 2021 tax year<\/a>, to account for inflation. Nevertheless, homeowners may have good reason to itemize. Namely, deductions for mortgage interest and home-based business expenses over the 2021 tax year.<\/p>\n\n\n\n

Important note if you work from home:<\/em><\/strong> If you’re a remote employee and not self-employed, you may not<\/em> take the federal home office deduction in 2021. Some states do allow this, but the federal return does not allow for it at this time.<\/p>\n\n\n\n

The mortgage loan borrower\u2019s year-end Form 1098, showing paid mortgage interest, arrives by mail early each year. It is also found on a borrower\u2019s online mortgage portal. That\u2019s the source of the mortgage interest claimed on Schedule A of Form 1040.<\/p>\n\n\n\n

Recent home buyers<\/em>:<\/strong> Don\u2019t miss mortgage points, and the interest you paid in your first ownership month, as stated on the settlement document issued at closing. <\/a><\/a><\/p>\n\n\n\n

Homeowners who bought or refinanced after 2006:<\/em><\/strong> If you pay monthly for private mortgage insurance<\/a> (PMI), that cost is deductible. The deduction was cut by 2018 tax changes but restored in 2020, so homeowners can claim it now, and get back what they couldn\u2019t claim in 2018 and 2019.<\/p>\n\n\n\n

Homeowners can deduct the local property taxes they pay each year, too, as part of the $10K deduction allowance. (When mortgage companies pay taxes out of the borrower\u2019s escrow money, that amount is written on the year-end mortgage statement.)<\/p>\n\n\n\n

The key piece of information? Form 1098, to be filed with the federal tax return. Those who need to file a state tax return<\/a> may be able to deduct mortgage interest there too.  <\/p>\n\n\n\n

<\/a>3.   Be Ready for Higher Income Tax for Funds Pulled From an IRA.<\/h2>\n\n\n\n

Although home buyers who\u2019ve tapped their traditional IRA retirement accounts for down payments may be exempt from the penalties that apply to people under age 59 \u00bd, watch out at tax time. Withdrawals of retirement money are added back into the homeowner\u2019s taxable income. Buyers should check with their tax experts before pulling money from an IRA to anticipate the consequences.<\/p>\n\n\n\n

As a general rule, to avoid penalties, withdraw less than $10,000. That\u2019s a lifetime cap for drawing money, free of taxes and penalties, for a home purchase. The withdrawn funds have to move from the IRA into the home purchase within 120 days.<\/p>\n\n\n\n

Speaking of IRAs:<\/strong> Recent tax changes are rewarding retirement account holders who contribute to their accounts with a retirement saver\u2019s credit<\/a>. Credits are powerful! They decrease the amount you\u2019ll need to pay in taxes.<\/p>\n\n\n\n

<\/a><\/a><\/a>4.   Don\u2019t Sweat a Recent Home Sale.<\/h2>\n\n\n\n

Did you sell a home last year? As long as you occupied the home for 2+ out of the last five years you owned it, there are no capital gains. You can make up to $250,000 in profit (double that for a couple filing jointly) and you\u2019re fine.<\/p>\n\n\n\n

To learn more about taxation and home sales, see the IRS fact sheet on capital gains and losses<\/a>.<\/p>\n\n\n\n

Even if you do have a taxable gain through your sale, you can offset it by adding the cost of qualifying home improvements to the tax basis. What\u2019s a qualifying home improvement? It\u2019s a change you\u2019ve made in order to:<\/p>\n\n\n\n