Ya gotta love living in Austin: no Texas state income taxes. Yea! On the other hand, there is this old uncle in D.C. determined to squeeze every Austin homeowner.
Before proceeding, let me confide, I think the IRS likes me. Why else would they write so often? Often enough that I finally coined a term of endearment, “IRSa.” Sounds less foreboding and far friendlier, don’t you think? Since we are on such good terms, I thought I would pass on a few tips to Austin, Texas homeowners.
First and Always Foremost: Don’t Cheat IRSa
If you do, she will hunt you down, key your truck, and carve her initials on parts of your body you can’t show in public. In fact, don’t ever let her think you are messin’ around behind her back. Keep records. If you don’t have proof, don’t make the claim. Suppose on the day you move into your new home, a slew of salespeople descend on your house: landscapers, pest control exterminators, solar power reps, catwalkers – all with a deal. The solar sweetheart offers you a sweet deal package in exchange for cash. You take it. You save a bundle. Good for you. Just don’t file Form 5695 (Residential Energy Credits) and try to take the deduction without proper documentation. As a homeowmer, keep receipts for everything and be sure to file as you go. March is for SXSW not scouring boxes and bins looking for faded receipts.
Benefits for Austin Homeowners
In case Momma forgot to tell you, greed is not a virtue. I do not claim every nickel and dime allowed to homeowners. What? I’m a fortunate woman – I have choices. I can battle raging semis on Mopac, stressed every mile to my office, or work from home. IRSa allows me to deduct $5.00 per square foot if I work in a dedicated space. I do not take this deduction. Why? In an audit, IRSa brings her issues to the table and I bring mine. Besides, when I sell my home, I must share with IRSa a percentage of my profits (a small detail) if I’ve taken this deduction.
Wear Sloppy Shorts, but Don’t Write Sloppy Briefs
If you earned $4,253.16 in interest, then report $4,253.16. Don’t get cute and say you earned $4,000.00. You may prefer the beauty of round numbers. The IRS also finds beauty in numbers. They will reward you with a beautiful set for penalties and interest. These may be so round as to make you swoon – people can only handle so much beauty. Precision is not in the eye of the beholder but in the code of the computers. Therefore, replicate exactly every piece of information you have in hand.
Take a Break
The Tax Code provides breaks to Texas home buyers (up to $10,000). You know what I tell my clients? “Take it!” When you purchase in Austin, you stand a decent chance of building equity. Should this happen, when you sell, pocket the profit and smile – big. In between, the IRS allows you to pocket even more. Think about it. You live in your place where you can paint any wall any color, deduct interest from your taxes and potentially make money. Don’t you love living in Texas?
Help Me if You Can
As a Texas homeowner, you may need some help the first time you file your taxes. I know I did. One year after filing, I started talking to a new guy at the gym. He looked pale except for the dark circles under his eyes. “I’m a CPA. I don’t get out much from February to mid-April. I go to work when its dark. I drive home in the dark.” “Oh really?” I replied. “I do my own taxes.” I’m thinking to myself that this guy had better look for another career. Between Turbo-Tax and Tax-Slayer and Let-Me-Keep-My-Hard-Earned-Money-MR-Taxman software programs, this guy will be standing at an onramp to I-35 looking for more than a tax tip. He then challenged me. “Let me take a look at your returns. If I can’t save you at least double for what I charge, then you’re good. Let me amend your return and see? After you receive your return, you can pay me.” “On one condition” I replied, “you do it by the book and I don’t get audited.” “Deal,” he said.
I learned a good lesson. Sometimes we need professionals. We pay them for performance. This is true for dentists, stylists, CPA’s and Realtors. Four days later, back at the gym, I spied Bob, the CPA. I walked over and before I could even greet him, he curled another 70lbs and simply said, “Sixteen hundred from Uncle Sam.”