Well it’s that time of year again, the sun is rising earlier, the days are getting longer, and spring is finally here. That also means the deadline for filing your taxes is quickly approaching. For some people, filing taxes can seem like a burden. Whether you owe money or not, here are three interesting facts most people don’t know when filing taxes:
- If you made any energy efficient improvements to your home in 2016 you can claim it as a Residential Energy Efficient Property Credit. Although the fancy name makes it sound complex, this credit is actually very easy to comprehend. Any money spent on energy efficient improvements to a home such as, an energy efficient washer, dryer or refrigerator can be taken as a credit. Up to 30% of the total costs is what your credit can be worth. The only cap/upper limits on the amount of the credits are if you installed wind turbines or fuel cells!
- Gambling losses and winnings must be accounted for on your federal return. Any gambling winnings are considered income; you must file a W2-G if you have gambling winnings on the year. Any amount over $5000 is subject to income tax. On the plus side gambling losses can be taken as a deduction. If you are itemizing your deductions you can deduct all losses up to the amount of your winnings.
- The IRS says that State Income Tax refunds can actually be taxable…wait what?! When I first heard this I had to do a double take. I asked my teacher, “So you are telling me, if you received a state refund last year you might have to include it on your federal return this year, as taxable income?” I immediately thought I had been doing my taxes wrong for the last few years. It turns out there is an easy way to break down if you do need to file your state refund or not. If you took the standard deductions last year you are in the clear and do not have to file you state refund, (insert sigh of relief for me here). But if you did claim itemized deductions and opted to deduct state income tax last year, you do actually have to pay taxes on your state return. You will receive a 1099-G and it must be included in this year’s taxable income.
For some of the more ludicrous facts about the history of taxes check out this site.