What are Deductions and Credits?
Deductions and credits are prevalent to the world of taxes. A tax deduction is when your adjusted gross income is reduced, therefore reducing your tax liability. Credits are an allotted amount that is taken out of your tax due. For example, a $1000 tax credit will reduce your tax due by $1000. You can consider this similar to a rebate or a coupon.
When you pay your property taxes, this amount is tax deductible. Be aware that anything from lender escrow accounts to tax reimbursements can be included. Check your forms and settlement sheets to find the amounts.
Take note that you can deduct all of your home’s mortgage interest. Make sure to check your settlement sheet to find any additional interest that was accrued during your partial first month that was part of your closing. You can also talk to your lender to have them point it out for you.
Tax Credit Options
Tax credits are great to shave off money. The good news is that there are some available to you, as a homeowner. Being energy efficient not only can save you money on utility bills but can also qualify you for federal tax credits. Improvements such as a thermal heat pump or solar energy systems can give you credit up to $30. Be sure to check online for more details on what types of rebates and credits are available to you in your area.
Bio: Kuba Jewgieniew is the head of , a brokerage firm that has made INC 500’s list of fastest growing companies for 6 years straight.