It’s heeeere: tax time. Although the deadline is a little later this year (April 18—thank you, weekend!), we’re still getting a bit close for comfort. This is especially true for homeowners who, rather than taking the easy-peasy standard deduction, generally prefer to save a bundle by taking the complicated path of itemizing their deductions instead. But if you haven’t filed yours or even thought about it yet, don’t panic! You have options. Here are three last-minute tax tips for homeowners that will save you plenty of money, headaches, and more.
Tip No. 1: Grab Form 1098
Form 1098, or the Mortgage Interest Statement, is sort of like your home’s W-2—a one-stop shop for your two biggest tax breaks, which are sitting in plain sight on this form.
Mortgage interest: “The biggest real estate tax deduction for most people will be the interest on their home loan,” according to Patrick O’Connor of O’Connor and Associates. Single people can deduct the full interest up to $500,000; for married couples filing jointly, the limit is $1 million. (Here’s more on how your mortgage interest deduction can help you save on taxes.)
Property taxes: This is the second-biggest deduction for most homeowners. According to the U.S. Census Bureau, the average household property tax is $2,127. (Here’s how to calculate your property taxes.)
Even though you might be eligible for other real estate–related deductions and tax credits, these are the biggies for most people. If you’re down to the wire on filing, you might just deduct these two and call it a day.
The Home Office Tax Deduction: One of the Most Misunderstood (and Dangerous) Tax Breaks
Hurry! 3 Homeowner Tax Breaks Set To Expire Within Weeks
9 Horrible Mistakes Homeowners Make on Their Taxes
But wait, there’s more!
Tip No. 2: File an extension
Despite what you might have heard, it’s totally simple and penalty-free to file for an extension, which will get you six additional months to get your taxes in order. But don’t get too excited; the IRS still requires you to pay your estimated tax bill by April 18, or else you’ll pay interest on what you owe down the road.
The IRS makes it easy to 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, one easy shortcut is to just pay the standard deduction now—or the same amount you claimed last year. All in all, it’s better to overestimate what you owe, because then you won’t pay any interest. Once you file for real, anything you’ve overpaid will come back to you.
But what if you need an extension because you can’t pay your tax bill? It’s still better to file for an extension with fuzzy numbers than to not file at all. The IRS has payment plans that can help if you are short on cash. Just file something—blowing the deadline entirely will open you up to penalties as well as interest on your bill. And maybe an audit, too.
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