Advertisement
  1. Business

3 most important deductions you need to claim

Published Mar. 27, 2016

Take a look at the three most important tax deductions you should claim this tax season as you get ready to crunch the numbers. You'll be surprised by how much you can save on your tax bill. MORTGAGE INTEREST

The mortgage interest deduction applies to both primary and secondary homes, said Mark Jaeger of TaxAct, a tax preparation software company. He added that the deduction also can apply to second mortgages and home equity debt up to $100,000 (or $50,000 if spouses file separately).

The IRS says taxpayers can deduct home mortgage interest if:

• They file a form 1040 and itemize deductions on Schedule A.

• The mortgage is secured debt on a qualified home that an individual owns. STUDENT LOAN INTEREST

"The amount is claimed as an adjustment to income, and the amount available to deduct is the lesser of $2,500 or the amount of interest actually paid," Jaeger said.

However, he added, the amount of the deduction gradually decreases and phases out if the taxpayer's modified gross income is more than $80,000, or $160,000 for married couples filing jointly. To claim the deduction for 2015, you need to meet these conditions:

• You paid interest on a qualified student loan in tax year 2015.

• You are legally obligated to pay interest on a qualified student loan.

• Your filing status is not married filing separately.

• If filing jointly, the taxpayer or their spouse cannot be claimed as dependents on someone else's return.

• The loan was taken solely to pay qualified higher education expenses. REAL ESTATE TAXES

Homeowners can use one form of tax to offset another. "Remember to deduct real estate taxes paid on real property you own — including state, local or foreign taxes," said Melinda Kibler, a certified financial planner and portfolio manager with Palisades Hudson Financial Group's office in Fort Lauderdale.

To claim the deduction, make sure the taxes are based on the assessed value of the property.

Advertisement

This site no longer supports your current browser. Please use a modern and up-to-date browser version for the best experience.

Chrome Firefox Safari Edge