Home Owner Tax  Checklist

2019 marks the first year that the new tax laws take into effect, leaving many people curious about whether this will result in a bigger refund compared to last year. While many factors affect your tax rate and refund, one thing you can control is proper preparation in advance for a smoother filing and (hopefully) a faster refund. 

While it can be tedious, time-consuming and, at times, confusing, starting early means you’ll have time to organize all documents while not being under the pressure of the ticking clock. Plus, filing early will get your refund that much quicker. Or, if you owe, you’ll have more time to prepare your budget for the hit that comes on April 15.

Here are some important items every homeowner should start compiling in advance to take advantage of available tax breaks:

Form 1098

If you paid at least $600 in interest in a year, your mortgage company is required to send you a copy of Form 1098 (also known as the Mortgage Interest Statement) by January 31st of the following year. Mortgage interest on first and second homes is generally deductible for taxpayers who itemize their deductions. With the new laws in place, this crucial deduction only covers interest paid on loans of up to $750,000, or $375,000 if you’re married but filing a separate return.

Mortgage Contract

Your loan contract contains information such as any points paid and escrow account details that are useful for filing your taxes. Mortgage points are prepaid interest that can help a borrower qualify for a lower interest rate over the life of the loan. If you purchased a property in 2018, and paid mortgage points in order to lower your interest rate, you will be able to claim this amount on an itemized tax return.

Property Taxes

Although property taxes are deductible in 2018 and beyond, due to the new Tax Cuts and Jobs Act, the state and local taxes, or SALT, deduction has been capped at $10,000 annually – $5,000 if married and filing separately. If you buy a home midway through the tax year, you can claim all taxes paid from the date of sale onward (but only if you itemize it). Otherwise, you can claim the standard deduction of $12,000 for single filers, and $24,000 for married couples filing join returns.

Once you have gathered all the important documents pertaining to your home, move on to tackle the following:

Know who you’re claiming

The first thing you’ll need to do in your tax preparation is to figure out who you will be claiming, if anyone. Know you will need all their necessary information such as Social Security or tax ID numbers. If you are filing jointly with a spouse, you will need his or her name and Social Security number, too. If you have a child under 24 years old who is a full-time student, and you are paying for more than half of their living expenses, then you may want to consider claiming them. However, if they work, they also have to pay taxes and cannot claim themselves in that case.

Track your income

What the IRS really wants to know about is your income, so you will need W-2 forms for every company you worked for in 2018. Federal law requires all employers to either send W-2s in paper or digital form no later than January 31, so if you don’t receive one, get in touch with your current or former employer right away. Not including an income source can turn into a much bigger problem down the line.

Here are some of the most popular income sources you’ll want to include:

  • W-2 forms (all employers)
  • 1099 forms
  • Alimony received
  • Business income (profit/loss statement)
  • Rental property income


Don’t forget deductions and credits

As you go about preparing your tax documents, make sure to research whether any of the following apply to your situation:

Common Deductions:

  • Property taxes and mortgage interest (Form 1098 issued by the lender or published inside the tax section of your online account)
  • Educational expenses (Form 1098-E)
  • Retirement account contributions
  • Medical bills (if greater than 7.5% of adjusted gross income)

Common Credits:

  • Child Tax Credit, Child and Dependent Care Credit
  • American Opportunity Tax Credit
  • Life Learning Credit
  • Retirement Savings Contributions Credit
  • Residential Energy Credit


Keep your receipts

There are plenty of receipts that are worth holding onto until tax season, including:

  • Home improvement purchases that made your home more energy-efficient
  • Classroom expenses for teachers who teach grades K-12
  • Charitable donations, whether cash or not
  • Anything you needed to buy for your job, including travel expenses, uniform cleaning and industry publications
  • Expenses for health and dental care

As always, consult your tax professional to find out exactly what you can deduct, but it’s best to have those receipts ready just in case.

If you haven’t saved all your receipts but pay for the vast majority of your bills and purchases electronically, they should all be itemized on your bank statements. You can print out the entire year of statements and highlight all potentially deductible expenses or use a software system such as QuickBooks that can connect to your accounts in order to export and categorize your transactions for you.

Decide how to file

Once you have everything in order, you will need to decide how you are going to file this year. You have two basic options: prepare taxes yourself or go to a professional. If you choose to do them yourself, there are many apps and software programs that can help you file properly.

TurboTax and H&R Block both provide apps that can assist you with filing your taxes, however they may be best suited for those individuals whose income and deductions are fairly standard and simple.

According to The Simple Dollar, some of the best software to use in 2019 includes TurboTax, H&R Block, and TaxAct, each of which has a paid and a free version for federal taxes and a paid version for state taxes. Each of them offers step-by-step guidance, which is crucial when dealing with a system as complex as tax filing.

If you choose to file your taxes with a professional, there are some apps you may find helpful, too. The IRS2Go smartphone app gives users many features such as updates on the status of their return, ability make payments, and a list of sites which offer free in-person tax advice in your area.

A loanDepot licensed loan officer can help with these and any other lending questions. Speak with one today!

Published January 21, 2016



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