Credits for Energy-Saving Home Improvements
The 2016 tax return was the last chance to claim a tax credit for most energy-saving home improvements. However, you can still claim solar credits, which are good until 2019 and then reduced yearly until 2021. You must claim this credit by filing form 5695 with your tax return. Solar credit applies to solar or photovoltaic panels used to generate electricity and solar-powered water heaters. These must be used at your home and solar heaters for swimming pools or hut tubs do not apply. The credit is for 30% of the cost and installation.
If you refinance your mortgage, you can deduct the points on the new loan over the life of that loan. If it’s a 30-year mortgage, you can deduct 1/30th of the points a year, which is equal to $33 per year for each $1,000 of the points paid. When you pay off the loan, be it because you sell the house or you refinance, you can deduct all undeducted points.
If you invest in a mutual fund and your dividends gained are automatically reinvested in the fund to buy more shares, your tax basis in the fund increases each time the dividends are reinvested. If you do not include the reinvested dividends in your tax basis, you will be subject to double taxation of the dividends earned, first when they’re paid out and second when they’re included in the proceeds of the sale.
Student-Loan Interest Paid by Parents
You can deduct loan interest if you are legally required to repay the student loan, but you can also deduct your parents pay back your loan. For the IRS, it’s as if the money was given to the child who in turn repays the debt. As long as the child is not claimed as a dependent, he or she can deduct up to $2,500 of student-loan interest paid by parents every year. The parents can’t claim these tax deductions since they are not legally liable for the debt.