Put off filing your taxes until the extended deadline on July 15? No need to worry! Here are three last-minute tax tips that can save homeowners money.
1. Grab Form 1098
Otherwise known as the Mortgage Interest Statement, Form 1098 is like a one-stop-shop for your possibly two biggest tax breaks: mortgage interest and property taxes. The biggest real estate tax deduction for most folks will be the interest on their home loan. Single individuals can deduct the full interest up to $500,000, while the limit for married couples filing jointly is $1 million (if you bought a house before Dec. 15, 2017).
If you purchased a home after that date, you will be allowed to deduct the interest on no more than $750,000 of acquisition debt (which is a loan used to buy, build or improve a main or secondary home). The second-biggest deduction for most homeowners is property taxes.
Just remember: The total amount you can deduct is $10,000, even if you pay more (that includes state and local income tax, property tax, and sales tax). Note: To make these deductions worthwhile, the numbers must add up to more than the current standard deduction, which increased to $12,200 for individuals, $18,350 for heads of household, and $24,400 for married couples filing jointly.
2. File an extension
Still, need more time to compile your taxes? It’s easy and penalty-free to file for an extension until Oct. 15. However, the IRS still requires you to pay your estimated tax bill by July 15 to avoid having to pay interest on what you owe later down the road. You can file for an extension either online or by mail. On the form, just estimate how much tax you owe.
If you’re filing an extension because you need more time to figure out your itemized deductions, you might want to consider taking the standard deduction now (or the same amount you claimed last year). It’s always better to overestimate what you owe because then you won’t pay any interest, and once you file for real, anything you’ve overpaid will be returned.
Need an extension because you simply can’t pay your tax bill? It’s still better to file for an extension with some numbers rather than not file at all. The IRS offers payment plans that can help if you are short on cash. Just file something, because missing the deadline entirely will open you up to penalties, as well as interest on your bill, and maybe even an audit.
3. Hire some help
If you make less than $69,000 a year, you qualify to use free tax prep software from the IRS. Even if you make more than that, there are numerous free or low-cost online tax-prep options that should work for anyone with relatively straightforward taxes. Another option is to find a good accountant. If paying someone to prepare your taxes sounds extravagant, keep in mind that, according to the U.S. Tax Center, the average cost of getting your taxes done is only $225, which usually is money well-spent.
An experienced accountant can actually save you money by spotting deductions you might not have found on your own and helping you plan to minimize the next year’s taxes. Another timesaver: Rather than snail-mailing your accountant your tax forms, snap pictures of them on your smartphone; some apps like CamScanner can do so with scanner-style quality. Accountants don’t require the originals to file.
