Congratulations on becoming a homeowner this past year! Whether it’s your first home or your forever home, becoming a homeowner is an exciting time. As we begin the new year, filled with resolutions and intentions, tax season can honestly seem far away. However, a little time spent now can save you immense headaches closer to April 15th. Find a few minutes to locate and familiarize yourself with the following items to make tax time easier.
Documents needed for homeowners. Your new home comes with some potentially big tax implications. Between now and the beginning of February, locate and file the following as you receive them:
- Property Tax Statement – This information allows you to correctly factor tax deductions you may be eligible to receive.
- IRS Form 1098 – This form reports the amount of mortgage interest you paid during the year. You’ll need this form even if you closed on your house toward the end of the year.
- Settlement Statement – You received this document at your closing. You’ll want to keep it handy for mortgage and property tax deductions.
- Mortgage Credit Certificate – This document allows you to apply to any state and local government incentives for first-time home buyers. You’ll also need to complete IRS Form 8396 if this applies to you.
Documents for those claiming home business deductions. If you’re a military spouse who freelances, owns a business, or might otherwise qualify, the following information will be handy:
- The square footage of the home space you use for your home office – Keep in mind that this space must be dedicated to your business needs only.
- Mileage log for car with notations on when you used it for business, volunteering, medical appointments, etc.
- Any receipts for parking, public transportation related to your business
- An accounting of your utility costs with a breakdown of what percentage applies to home business use
Other items to consider. Tax time can be fairly comprehensive. Consider creating a folder, whether electronic or tangible, that includes the above plus the following:
- Children’s social security numbers
- Receipts for child care and medical expenses
- College savings plan receipts
- Receipts for charitable donations
- Property tax expenditures (including your automobile)
- 1099 statements
- Home improvement receipts
A little preparation now will make the stressful tax season go much more smoothly. Whether you prepare your own taxes, hire a professional, or use the free services available on base, you’ll thank yourself for your foresight. One final tip: Hold on to all the documents you use in filing your taxes for at least three years. While no one welcomes a visit from the IRS, you don’t want to be caught unprepared!