Rearing its ugly head again, tax time is right around the corner. To help out, we have put together a few less well known areas that are often overlooked by homeowners.
• Points: Most homeowners know that when they buy a house, they can take a deduction on any points they had to pay the following year. What most homeowners don’t know is that they can also get deductions on refinanced points. Yes, the IRS does require refinanced points to be spread out over the lifetime of the loan, which means most likely a few hundred dollars in extra deductions for the next several years; however, a few hundred dollars can mean the difference between a refund and a payment.
• Energy: True, tax credit incentives for saving energy ended in 2013. But the IRS is still giving tax credit for energy efficiency rather than energy savings… trust the IRS to be able to track and record the difference. Check with your accountant for more information on the Residential Energy Efficient Property Credit.
• PMI: Most homeowner who seized the American Dream by taking advantage of the 0%-5% down programs are intimately familiar with private mortgage insurance (PMI). The monthly payments and havoc unleashed on your mortgage may finally provide something in return. Homeowners paying PMI may be able to claim the PMI deduction on their federal return if their policy was issued after 2006 and they meet specific AGI (adjusted gross income) limits based on filing status. Keep in mind that 2014 is the current expiration year for this deduction and check with your tax professional to see if you qualify.
Just remember that while the government is entitled to collect taxes, that’s no reason anyone should have to pay one penny more than they actually owe and IRS audits don’t get you a refund.