There are many tax deductions and credits that homeowners may qualify for each year when they file their income taxes. However, to claim these deductions and credits, homeowners must be armed with correct information. A checklist makes it easier to keep and locate all necessary documentation that may be required to file your income taxes to your maximum benefit.
W-2 and 1099 Forms
Your W-2 and 1099 forms include details about your wages and earnings throughout the tax year. To file your taxes, you need these forms to account for your income. All tax filers must provide gross income amounts as starting points for filing their income taxes. If you did not receive a W-2 form from an employer, contact the human resources division to obtain one. If you did contract work for a company and did not receive a 1099 form, contact the company to request one. All income must be reported on your taxes annually. A copy of your W-2 forms must be filed with your taxes; you generally do not have to file a copy of 1099s with your federal taxes, but may have to file one with your state, depending on whether your state levies income taxes.
Form 1098 is sent to you by your mortgage lender and includes the mortgage interest you paid, points paid on the loan, private mortgage insurance payments and often the amount of real estate taxes paid on a mortgaged property. With the interest payment information, you can file for a mortgage interest deduction (MID). You will get more significant deductions for your MID during the early stages of your loan, since your payments go more toward interest than principal. Any private mortgage insurance payments can be deducted as interest. Deductions for your real estate taxes can be taken for the amount of tax you've paid over the course of the year. Points paid during the origination of your loan are deductible, too, and information about that should be inputted directly from information on your Form 1098.
Your loan contract(s) provides information about the points you paid, which can be deducted along with the MID. Also, interest on home improvement loans taken out to make significant renovations to your home, such as adding on rooms or finishing a basement, can be used to reduce your amount of tax owed to the IRS.
Home Improvement Receipts
Improvements to your home that helped to increase its energy efficiency may be deductible. Your receipts and information regarding your purchases will provide the amounts you spent on the improvements. Improvements eligible for deductions include new roofs, insulation and new windows, in addition to adding green energy initiatives to your home, such as geothermal or solar energy system additions. Costs associated with these improvements may be deductible, and receipts can document how much you spent.
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