Homeowners can claim a tax credit for adopting certain energy-efficient appliances and making improvements to their homes. This credit, known as the Residential Renewable Energy Tax Credit, is now extended through the end of 2020.
In this article, we will discuss your tax prep checklist, tax deductions and credits, and how you can get the most money back on your taxes.
Tax Prep Checklist
To make the tax filing process simpler, gather your documents before you start. Here is a checklist of the applications and forms you will need to complete.
- Tax ID Number or Social Security Number for You and Your Family – You need your Tax ID number, your spouse’s Tax ID number, and your dependents’ Tax ID numbers. If someone in your family doesn’t have a Social Security Number, you will need an ITIN or Individual Taxpayer Identification Number.
- Date of Birth
- Last Year’s Federal and State Return Taxes (optional)
Income and Investment Information
- Financial Institution Statements – If you are paying down student debt, you will need Form 1098-E. If you made IRA contributions, you will need Form 5498. If you have a house mortgage, you will need a Form 2098.
- Income Records – For gambling winnings, award money, or lottery payouts.
- Form W-2 Wage and Tax Statement – The W-2 Form shows your income, and how much was deducted for taxes. Each employer is responsible for sending the form (until February 2021).
- From 1099 – There are different types of 1099, including:
- 1099-MISC (if you are self-employed)
- 1099-DIV (for dividends)
- 1099-G (if you received benefits from the government)
- 1099-K (third-party transactions through PayPal or other providers)
- 1099-R (for distributions from IRAs, annuities, or pensions).
Business and Self-Employment Information
- Business Expense Records (credit card statements, receipts, check records)
- Mileage Records
- Home Office Costs (including expenses such as your utility bills from Atlanta Gas Light)
- Quarterly Estimated Tax Payment Receipts
Medical Expense Information
- Form 1095 – A Form 1095 is a Health Insurance Coverage Form (for marketplace enrollment you need 1095-A, for insurance coverage you need 1095-B, and for employer coverage you need 1095-C)
- Social Security Benefits
- Records for Unreimbursed Expenses (surgeries, exams, and preventative care)
- Educational Expenses
- Property Taxes and Mortgage Interest
- Charitable Donations
- State and Local Taxes
Tips to Get the Most Money Back on Your Taxes
While you can’t do anything about the fact that you have to pay taxes, you can control how big the refund will be. If you rely on your tax refund to save for your future, we have some excellent tips for getting the most money back on your annual taxes.
- Review Your Filing Status – Filing as married, single, or divorced can affect the amount of money you get back on your taxes.
- Increase Your Retirement Account Contribution – One of the most common ways to increase your refund is to build up your retirement fund 401(k) or IRA. The more you contribute to your fund, the less of your income is subject to annual taxes.
- Take Advantage of Tax Deductions – There are a lot of deductions that you may not know about but can make a big difference in your annual tax refund. Pay attention to state sales tax, energy-efficient tax credit, reinvested dividends, student loan interest, charitable donations, EITC (Earned Income Tax Credit), jury duty, medical miles, and child/dependent care.
Tax Deductions and Credits for Energy Efficiency
Since 2019, there has been a non-refundable tax credit available if you have wind energy, solar electric power, a fuel cell, solar water heating, or a geothermal heat pump placed in your home. This is known as the Residential Energy Efficient Property Credit.
If you made energy-saving improvements at home, you could claim the tax credit for a percentage of the total cost you invested. The percentage varies based on when you installed solar solutions or other energy-efficient appliances in your home:
- After December 31, 2016 and before January 1, 2020 – 30%
- After December 31, 2019 and before January 1, 2021 – 26%
- After December 31, 2020 and before January 1, 2022 – 22%
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