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Yahoo
14-04-2025
- Business
- Yahoo
Can Homeownership Lower Your Taxes? Here Are 6 Expert Tips To Help You
What tax benefits does owning a home offer? There might be some that homeowners are missing out on. Learn More: Read Next: Here are some of the ones experts recommended looking into before homeowners file their taxes. Greg Clement, CEO and founder of Freedomology, an app designed to help people achieve financial freedom, pointed out that the mortgage interest deduction is probably the most popular way homeowners benefit when it comes to taxes. With it, homeowners can deduct home mortgage interest on the first $750,000 ($375,000 if married filing separately) of debt. Check Out: Clement highlighted property taxes as another expense that can be written off. Just keep in mind that the deduction for state and local taxes, including real estate taxes, is limited to $10,000. For married couples filing separately, the limit is $5,000. For those who work from home, Clement pointed out that there is a deduction for home offices for the right type of employee. 'If you work from home you might qualify for a home office deduction if you are self-employed. W-2 employees are out of luck,' he said. For those who have the means, Clement recommended renting out part of a home or the entire place to be eligible for certain tax benefits. 'If you're renting out part of your home, like an Airbnb or a basement apartment, you can deduct a percentage of your utilities and maintenance. That's free money most people never take advantage of,' he said. 'Some states offer property tax exemptions for seniors, so it's always worth looking into,' Clement said. This usually applies to homeowners 65 and older, though some states give tax breaks to those as young as 61. In states like New Hampshire, seniors benefit from increased tax exemption as they get older, according to The Mortgage Reports. However, some of these exemptions might not be available if a senior's income is more than a certain amount. Those who make sustainable changes to their homes may be eligible for energy-efficient property credits. 'If taxpayers are in a position to put solar panels on their home or make other energy-efficient improvements, then that can be a great method of reducing your energy bills and claiming a significant tax credit,' said Adam Brewer, an attorney at AB Tax Law. Overall, there are many tax deductions homeowners may be able to qualify for. Clement cautioned that not everything is tax deductible, but it's still important to keep track of upgrade costs. 'Some homeowners think everything they spend on their home is deductible, but that's far from the truth. You can't deduct a new hot tub or the pool you just put in, no matter how nice they are. However, if you're making major upgrades, keep track of them anyway. They could lower your capital gains tax bill when you sell the house,' he said. More From GoBankingRates6 Reasons Your Tax Refund Will Be Higher in 2025 7 Tax Loopholes the Rich Use To Pay Less and Build More Wealth 25 Places To Buy a Home If You Want It To Gain Value This article originally appeared on Can Homeownership Lower Your Taxes? Here Are 6 Expert Tips To Help You
Yahoo
12-04-2025
- Business
- Yahoo
How To Use Tax Treaties for International Income
Earning income across borders can lead to one frustrating outcome: double taxation. According to the IRS, U.S. citizens are subject to U.S. income tax even if their foreign income is also taxed by the source country. Read Next: Explore More: The IRS Publication 901 (U.S. Tax Treaties) shares summaries of all tax treaties in effect between the U.S. and other countries. These are agreements between countries made to avoid the issue of double taxation, helping to cut through red tape and reduce the burden. The key is knowing how to apply the right treaty to the right kind of income. From expats living and working abroad to U.S. residents receiving rental or other income from a foreign country, there are ways to avoid paying more taxes than necessary. Here's how: All tax treaties will cover where different types of income are taxed. While for some countries, income is taxable only in the country of residence, it's important to remember that the U.S. taxes its citizens on worldwide income, regardless of residency. So, if a treaty says income is 'taxable only in the country of residence,' the IRS will still tax it. Check Out: Treaties only apply when residency is established. However, residency rules aren't the same across borders, and a person can end up being a resident of both countries under local laws, yet only one under treaty rules. Most treaties have tiebreaker tests for this situation, looking at factors like where the person's permanent home is, where their 'center of vital interests' (personal and economic relations) is, where they habitually live and their nationality. Relief from double taxation usually comes in two forms: a foreign tax credit or the foreign earned income exclusion. The foreign tax credit lets U.S. taxpayers subtract foreign taxes paid on the same income from their U.S. tax bill. Meanwhile, the foreign earned income exclusion allows those who live and work abroad to exclude a portion of foreign wages from U.S. taxation. Getting the benefits isn't automatic, so it's important to claim in the way the relevant tax treaty requires. That means filing the right treaty forms with the tax return. The IRS uses Form 8833 for treaty-based positions, and other countries have their own versions. As with anything related to filing taxes, keeping accurate records is key. Proof will be needed of things like residency, income and expenditure. Without proper documentation, relief might be denied even if the claim is correct. International income gets reported on a U.S. return, but a properly claimed credit or treaty benefit can keep it from being taxed twice. Understanding what's taxable, how to claim relief and where residency lies can make a big financial difference. More From GoBankingRates6 Reasons Your Tax Refund Will Be Higher in 2025 7 Tax Loopholes the Rich Use To Pay Less and Build More Wealth 25 Places To Buy a Home If You Want It To Gain Value This article originally appeared on How To Use Tax Treaties for International Income
Yahoo
07-04-2025
- Business
- Yahoo
Want To Get Your Tax Refund Quicker in 2025? Follow These 6 Tips From the IRS
Tax Day is just around the corner. According to the IRS, the average federal income tax refund amount as of March 14 was $3,271 — a large amount of cash that can make a big difference in your budget. Read Next: Find Out: To help speed up the process, the IRS shared tips to help you avoid delays and get your money quicker. Before sitting down to do your taxes, gather all of your important tax-related documents. This includes W-2s, 1099s, paperwork for tax deductions or credits, last year's tax return and other tax forms. The IRS also recommends checking your IRS Individual Online Account to view your forms under the Records and Status tab. For You: Even a small mistake can cause issues with your tax refund. Double-check everything before submitting your tax return. A new CNET survey found that one of the top fears for taxpayers (25%) is making a mistake on taxes, which can lead to delays and potentially an IRS audit. In 2023, the IRS closed 582,944 tax return audits, resulting in $31.9 billion in recommended additional tax payments. Some of the most common errors to avoid include: Missing or inaccurate Social Security numbers Misspelled names Incorrect filing status Math mistake Figuring credits or deductions Incorrect bank account information Unsigned forms Filing with an expired individual tax identification number The IRS recommends electronic filing if you want your tax refund quickly. A refund for a paper tax return can take six to eight weeks, whereas e-filing can take less than 21 days. There are even free filing methods available, such as IRS Free File, Free File Fillable Forms and Direct File. E-filing helps reduce mathematical errors, identify tax credits and deductions and notifies you if you've missed important information. Direct deposit is the fastest and safest way to receive a tax refund. Instead of waiting for a paper check in the mail, which can take weeks and is more prone to delays or theft, your refund is deposited directly into your bank account, often within 21 days of filing. Report all taxable income to avoid discrepancies on your tax return. If you fail to report your income accurately, it could also result in penalties and interest. The IRS says taxable income can come from various sources, including wages, salaries, tips, bonuses, commissions, self-employment income, interest earnings, unemployment benefits and digital assets. Make sure you sign and date the return before filing your tax return. If you're filing a joint return, both spouses must sign and date. More From GoBankingRates6 Reasons Your Tax Refund Will Be Higher in 2025 7 Tax Loopholes the Rich Use To Pay Less and Build More Wealth 5 Types of Vehicles Retirees Should Stay Away From Buying This article originally appeared on Want To Get Your Tax Refund Quicker in 2025? Follow These 6 Tips From the IRS Sign in to access your portfolio
