Uncle Sam encourages homeownership by American taxpayers – apparently with considerable success. For many, the deductions and other tax benefits that come with owning a home are a major deciding factor in buying a home.
The biggest homeowner tax break for most people is the mortgage interest deduction, taken on Schedule A, Form 1040. You can generally deduct the interest portion of your monthly mortgage payment with your other itemized deductions.
Mortgage interest is generally interest on any loan that is secured by your home or second home. If you took out a loan to buy or build a home, you refinanced a mortgage, or you took out a second mortgage or home equity line of credit, the loan is generally secured by your home.
There's not usually much doubt which home is your main home. That's generally the home where you receive your mail and spend most of your time. Your second home can be a house, condo, mobile home, motor home, or even a boat, as long as it has sleeping, cooking, and toilet facilities.
If you have more than one second home, you can only deduct mortgage interest that you incurred on one second home at any given time during the year.
If your acquisition mortgages on your main home and second home together are less than $1 million ($500,000 if you are married filing separately), your deduction is not limited.
However, if you took out your mortgage after October 13, 1987, and your total mortgages are over these limits, you can only deduct your interest expense on the balance of your loans up to the limit.
If you have a home equity loan on your home, you can only deduct the interest on up to $100,000 ($50,000 if married filing separately) of the balance, or the total of each of your home's fair market value reduced (but not below zero) by the amount of its home acquisition debt and grandfathered debt. This should be calculated as of the date the last debt was secured by each home.
You can deduct points when you purchase or refinance a home. Points are the amount you spend to bring down your interest rate on the loan. They are based on the amount you borrow – one point equals 1% of the amount of the loan.
When you buy or build your home, you can deduct the full amount of points you pay in the year you pay them. If you pay points when you refinance, you deduct the points over the life of the loan.
Real estate taxes are another major expense for homeowners – but they can also be another important tax deduction. If you pay your real estate taxes with your mortgage payment, you deduct the real estate taxes your escrow company actually pays on your behalf, not the amount you pay into the escrow account.
April 10 — Employees who work for tips
If you received $20 or more in tips during March, report them to your employer. You can use Form 4070.
April 15 — Individuals *2017 Filing Deadline: 04-17, 2018*
File a 2017 income tax return (Form 1040, 1040A, or 1040EZ) and pay any tax due. If you want an automatic 6 month extension of time to file the return, file Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return. For more information, see Form 4868. Then, file Form 1040, 1040A, or 1040EZ by 10-15.
April 15 — Corporations *2017 Filing Deadline: 04-17, 2018*
File a 2017 calendar year income tax return (Form 1120) and pay any tax due. Details
April 15 — Individuals
If you are not paying your 2018 income tax through withholding (or will not pay in enough tax during the year that way), pay the first installment of your 2018 estimated tax. Use Form 1040ES.
April 15 — Household Employers
If you paid cash wages of $2,000 or more in 2017 to a household employee, you must file Schedule H Details
April 15 — Corporations
Deposit the first installment of estimated income tax for 2017 Details
April 15 — Social security, Medicare, and withheld income tax
If the monthly deposit rule applies, deposit the tax for payments in March.
April 15 — Household employers
If you paid cash wages of $$2,000 or more in 2017 to a household employee, you must file Schedule H (Form 1040). If you are required to file a federal income tax return (Form 1040), file Schedule H (Form 1040) with the return and report any household employment taxes. Report any federal unemployment (FUTA) tax on Schedule H (Form 1040) if you paid total cash wages of $1,000 or more in any calendar quarter of 2016 or 2017 to household employees. Also, report any income tax you withheld for your household employees.
April 30 — Social security, Medicare, and withheld income tax
File Form 941 for the first quarter of 2018. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter timely, properly, and in full, you have until 05-10 to file the return.
April 30 — Federal unemployment tax.
Deposit the tax owed through 03-if more than $500.