- August 10, 2020
- Posted by: admin
- Category: blog
According to research, homeowners spend an average of $2,375 on property taxes. One prominent positive aspect of being a homeowner is that you can enjoy property tax deductions and several other benefits. But to make the most out of these deductions, you need to have a good plan.
Being informed about what you can cut down and their relation to the standard deductions help you reap the full benefits of partially or fully deductibles expenses. Ahead, we’ve enlisted some tax planning strategies that you must implement for reduced homeowners’ tax expenses.
Strategy #1: Be Informed About Your Homeowners Tax Deductions
You may be familiar with the notion that owning a house can help save you on taxes more than renting it. Other than the premium on your home insurance, there are several other tax expenses that you can save on, including:
• Property taxes
• Mortgage interest
• Private mortgage insurance
• Points on your mortgage loan to decrease the interest rate
Strategy #2: Consider Everything Else IRS Deducts Against Your Income
You can increase your tax deductions by keeping a record of everything you are allowed to itemize by the Internal Revenue Service (IRS) and required to pay tax on. These expenses include:
• Medical expenses that accumulate to more than 7.5 percent of your taxable income (adjusted gross income) can be deducted from your tax returns.
• Charitable contributions can help you deduct up to 60 percent of your taxable income, leading to reduced tax payment. However, to avail this, you need to make your charitable contributions to the 501c3 non-profit organizations recognized by the IRS and exempted from tax.
• Losses and casualties caused by federally declared disasters—such as theft, earthquakes, vandalism, fires, natural floods, hurricanes, terrorist attacks, etc.—aren’t usually covered by homeowners’ insurance, but they are tax-deductible. However, you can only avail of this deductible when the loss exceeds 10 percent of your adjusted gross income after subtraction of $100.
Strategy #3: Identify When It’s Better to Go with Standard Tax Deductions
After noting all your itemized tax deductions, add them to see whether they are less or more than the standard deductions. If the standard deduction is more than the total itemized deductions, it’s better to take the standard deduction. It will allow for easier filing of tax returns at a reduced risk of audit.
Here are the 2020 standard deductions as determined by the IRS.
Filing Status Standard Deduction
Single $12,400 (from $12,200 in 2019) https://www.forbes.com/sites/davidrae/2019/12/18/standard-deduction-is-rising/ – 535b35d76078
Head of Household $18,650 (from $18,350 in 2019)
Married Filing Joint $24,800 (from $24,400 in 2019)
Because of the rise in the standard deduction, fewer taxpayers will likely be itemizing deduction this year.
For more advice on how to increase your tax savings while complying with federal laws, get in touch with our home insurance advisors in Indian Orchard. We can also help you get home insurance in Indian Orchard at affordable rates.
Learn more about us here.