[Disclaimer: While you might be tempted to quit reading mid-post, you'll get the most bang for your buck if you read through to the end.]
This morning I attended a class at First American Title Company called Tax Strategies for the Self-Employed. As a Realtor, I am an independent contractor in the eyes of the IRS. On top of the income taxes that everyone pays, we self-employed pay an additional 15.3%, meaning our income taxes can add up to almost half of what we earn! So it behooves me to take such a class and learn as much as I can about the tax laws and how to deduct expenses related to my business. I found it useful, yet still daunting, even though the instructor said the laws were written to be understood by 4th-8th grade readers.
So with taxes on the brain, and the impending deadline of April 15 to file on time, I bring you this post, which I'm excited to report is being posted from the River Oaks Coffee House, a local coffee shop I've been supporting with a cup of coffee or Chai every two weeks or so since it opened. (I realize that's not much, but it is more support than I give the 7 Starbucks located within a mile or so of my house.)
Back to taxes, if you purchased a home between January 1 and November 6, 2009 for the first time (or haven't owned a home in the last three years and purchased one during that time), you may be eligible for the First-Time Home Buyer Tax Credit, which could help lower your income taxes for 2009. (If you purchased it after November 6, click here for information on the Extended Home Buyer Tax Credit, which is in effect until April 30, 2010.)
Here's a video from the IRS:
Another important thing to remember as you prepare your income taxes this year is that the interest on your mortgage is tax-deductible. IRS Publication 936 goes into detail about the what's and how's of home mortgage interest deduction. My broker, John A. Daugherty, Jr., stands by the idea that you cannot get a better deal renting than you can buying after deducting the interest on a mortgage. (For a more detailed look at Renting vs. Buying, click here.)
We're not done talking taxes. If you bought a home last year in the great state of Texas, it is time to apply for your Homestead Exemption. Taking advantage of this exemption will save you 20% in property taxes annually. There are a few requirements: You must own your home on January 1 of the tax year. You must have occupied it as your principal residence on January 1. You or your spouse must not have claimed this exemption on any other property for the tax year. Click here for a link to the form and don't forget to get it turned in by April 30.
Well that about sums it up. I hope that this post was not too taxing. Here's to a prosperous 2010!
