The spring is typically a time when most everyone has taxes on their mind. For some of us, this can mean making final payments while others will be lucky enough to receive a nice refund check. Regardless of your particular situation, one thing we all have in common is we all have to pay our taxes. Here are 6 things that you can take full advantage of when you are preparing your next return.
Home Office – If you don’t already have a home office, you may want to invest in creating one. Having an office allows you to take a tax deduction in a couple of ways. You can do this with the simple method of $5 per square foot or you can calculate a percentage of your home’s electric bills and expenses. However, you must use the office regularly and exclusively for work as well as record your expenses by keeping receipts.
Pay Property Tax early – This can work to your advantage for whichever year you may need to take a larger deduction. For example, you may get your tax bill in December with a due in late January. Pay it in December if you need a larger deduction for that year, or don’t pay it until January if you estimate that you will need a larger deduction in the following year.
Solar Panels – “You can take a credit of up to 30%, with no cap, on the equipment and installation costs of solar energy panels and solar water heaters you purchase in 2017,” says Jacob Dayan, partner and co-founder of CommunityTax.com. This equipment must be used to heat water or power either your primary or second home. This cannot be used for a luxury item such as a pool or spa.
HELOC for improvements – If you are going to be building an addition or doing a significant remodel, consider taking out a home equity line of credit. The interest on the loan is tax deductible which means that the upgrades can be a lot cheaper for you.
Home Improvement Receipts – Make sure that you keep records and receipts of improvements that you make to your home. Any significant improvement like a kitchen remodel, new roof or furnace can be used against your capital gains taxes you may have to pay when you sell the home.
Pay Points – If you intend on buying a home this year or think you will be refinancing, then you could save on taxes in terms of points. Points are also known as loan origination fees or discount points which is prepaid interest. If you are going to be purchasing a home, then you can deduct them for the year that you make the purchase. If you are just refinancing, then you can deduct them over the whole term of the new loan.