Top Ten Questions for Do it Yourself Filers
Before you dive into your tax filing journey, take a few minutes to ask yourself the following questions.
1. Business vs. Personal - do you know which is which? Make sure you have receipts of any business deductions and be careful that none of them show both business and personal expenses on the same receipt.
2. Do you pay a mortgage? Interest on the loan for your primary residence is tax-deductible.
3. Do you have a refinanced or a purchase loan? The points you've paid on your new loan can be written off. If you've refinanced before and have points left over that you haven't deducted, you can write them off the year you obtain your new refinanced loan.
If you have a purchase loan, the points you paid at closing can be deducted from your income tax statement for that year - even if the seller paid some (or all) of your points for you.
4. Have you sold your home? The 1997 Tax Act grants that once every two years single homeowners can realize a tax-exempt profit of up to $250,000 as long as they owned and occupied their home during any two of the last five years. Married homeowners who file jointly do not have to pay taxes on up to $500,000 when they sell their primary residence.
5. Have you made home improvements? You can't deduct them, but they increase the value of your home and work into No. 4.
6. Have you paid property tax? The same year you pay state and local property taxes, you can deduct them as an expense against your income.
7. Do you have a home office? As long as you keep your office for business, 100 percent of the expenses related to office upkeep and part of related expenses like utilities and garbage pickup are deductible.
8. Have you moved? When you relocate 50 or more miles for work, you can write off the cost of moving - so keep receipts of all moving expenses.
9. Have you made home improvements for health reasons? As long as these improvements don't add to the overall value of your home and have been made for a chronically ill or disabled person, you can deduct these expenses.
10. Do you own a vacation home? You can actually deduct some of the costs, including property taxes, mortgage interest, and loan points.