A lot of homeowners have refinanced their mortgage in the past year and now need to do their taxes. Did you know that the costs and fees related to refinancing a mortgage are tax deductible? Were you aware that you could get tax deductions for any points you may have pre paid for? Here are some things that homeowners need to know about what tax deduction may be available to them if they got a mortgage refinancing.
Mortgage Refinancing Points are Usually Tax Deductible
When you first got your home mortgage, you might have prepaid for points on the loan. These prepaid points can be deductible from your taxes, for the entire length of the home loan. That means that it is possible for a typical homeowner to deduct the amount of interest points they have paid in the past 12 months from their taxes. This can easily add up to thousands of dollars in payments and savings when you deduct them from your taxes.
Cash Back Mortgage Refinancing Interest Payment Tax Write Offs
Sometimes, homeowners got a mortgage refinance that enabled them to take out some of their homes equity in the form of cash back. These homeowners may be able to write off an entire years worth of mortgage interest payments if they have met some basic requirements of the IRS. To be able to do this, home improvements or repairs must be made with the money received from a cash back refinancing. Also, homeowners who refinanced a mortgage and paid it off early are able to deduct any remaining points on the loan from their taxes.
Things to Look Out for When Deducting Mortgage Refinance Costs
As with nearly any Government agency that exists, there are restrictions and requirements that must be met before deducting mortgage refinancing costs, fees, or points, on your taxes. There are some costs that will not be able to be deducted from your taxes, including private mortgage insurance, lawyer costs, and some other fees. Always be sure to check with a tax professional as each persons situation is different. However, in general, there are a lot of deductions available to the regular homeowner who have refinanced a mortgage in the past year.
A lot of homeowners have taken action throughout the last year and have gotten a mortgage refinancing for themselves. Right now, is prime tax season and many people are unaware that a lot of their expenses related to refinancing a home mortgage are actually tax deductible. Do not overlook the possibilities that you can save a lot of money if you have refinanced a loan in the past year. If you do not take these deductions, they will not be available to you again unless you get another mortgage refinancing. Make sure you know your situation, what tax deductions are available to you, and use them accordingly.
You probably already know that finding and using more tax deductible items can lower your tax bill. But how do you find and use these valuable tax deductions? Easy… You can go to Turbotax online and use their tax deduction maximizer to find more tax deductible items that are available to you.
There are over 350 tax deductible items the maximizer will search and show you how to qualify for.
This is how the deduction maximizer works
- Shows you how to qualify Each tax deduction has certain requirements to qualify. You are shown how to qualify for each deduction.
- Looks for deduction opportunities As you enter your information, tax deductible items are being searched to see which ones you may qualify for.
- Miscellaneous tax deductions Once you’ve entered your information as prompted, the deduction maximizer will alert you to any of the over 350 other miscellaneous tax deductible items you may qualify for.
- If you own a home Instead of taking the standard deduction, let the deduction maximizer check to see if you could save money by itemizing. If the interest you paid on your mortgage is more than the standard deduction, you would be better off itemizing.
- Should you Itemize? Whether you own a home or not, itemizing can still save you lots of money. Let the maximizer determine which saves you the most money. Itemizing or standard.
If you want a fast way to find more tax deductions, try using the deduction maximizer. Turbotax lets you use their online tax software for free, for as long as you like. There’s no charge unless you decide to file your taxes through them.
As you may know when you become self employed your taxes become much harder to keep up with. To save money in this economy you will need all the self employment tax deductions you can get. So here are ten tax tips that can save you some real cash.
1. Your home office can be a good place to start. Put together a map that outlines your work space in your home including the restroom. You can not deduct your entire home but just the part you work in. Things like a portion of mortgage, utilities, home insurance, property tax and maintenance done that year can all be a self employment tax deduction based on how much of a percent of your home is for work.
2. You can deduct all of your health and dental insurance premiums if you pay for it yourself and you are not able to qualify for your spouse’s employer plan. If you cover your whole family then you can deduct them as well. This is only for self employed people so take advantage of it.
3. Meals and entertainment can also be a good source for tax deductions. Just make sure you keep the receipts and do some work before or during the activity. You can get up to 50% off. Keep a chart of who you were with and when it took place. Also what business was discussed. Do this right so you will not get audited.
4. Your phone and internet use too can be a deduction. Make sure you only take out the portion that relates to your business. But if you keep a second line that is only for business then you can take the full cost off.
5. The interest occurred on the business loans and credit cards can also save you some money. With credit cards you must only deduct the interest that you got when you purchase something that is for your business.
6. The miles you put on your car for business travel is a difficult self employment tax deduction. The tip here is to use the standard mileage rate determined annually by the IRS. Keep track of the miles you drive and the dates. Then add up all the miles and multiply the total miles by that years rate and that will give you your amount. You can use the actual expense method but that requires much more detail work. If not done right then prepare to be audited.
7. If you have a specific publication that is related to your work then you can deduct the cost. This is not your local newspaper. If you are a fisherman and you subscribe to a fishing licensing journal then you could deduct that expense.
8. 100% of your travel expenses are deductible for out of town visits only. If you stay over night then you can deduct the hotel cost and 50% of meals and entertainment. If not then you can only take out the cost to get there and back.
9. Any education you acquired that is related to your business can also be a tax deduction. But do not try to save on classes that have nothing to do with your current company.
10. Self employment retirement plans can be the best tax deduction of all. If you make around $250,000 a year you can contribute up to 25% of your net income to a Simple IRA or Keogh plan. If you make less than that then you can contribute to both a self employed retirement plan and an IRA. You must be in the IRA’s income phase-out limit.
Hope you found these ten tax tips useful. These self employment tax deductions can save you a lot of money when you do your taxes. Just make sure you follow the tax laws very carefully or you could end up on the IRS’s audit list.
