By Deborah Ritz
I have always rented and am now contemplating buying a home. From an income tax standpoint, what other things should I know before I take this step?
Homeowners have a couple of deductions that renters are not eligible for.
In most cases new homeowners will have mortgage interest and property taxes that if they itemize will be fully deductible from income.
While you mull over this move remember you will pay more in property taxes and interest than you will receive as a reduction in income taxes since it reduces the taxable income, not the tax due.
Also be aware there are income limits on most deductions and credits.
—
I have just received a tuition statement (Form 1098-T) from my daughter’s college and on it is a figure for the scholarship she received. Is this scholarship taxable income?
Students who receive academic scholarships may exclude from taxable income on their tax return the amount required for tuition, fees, books and supplies.
However, they must report as taxable income on their tax return any academic scholarship funds used for other expenses, such as room and board.
Qualified academic scholarships and fellowships are treated as tax-free amounts on your tax return if all of the following conditions are met:
The student is a candidate for a degree at an educational institution
Amounts the student receives as an academic scholarship or fellowship are used for tuition and fees required for enrollment or attendance at the college, or for books, supplies and equipment required for college courses of instruction.
The amounts received as an academic scholarship are not a payment for the students services, such as teaching other students.
—
Questions for Deborah Ritz can be e-mailed to The Weekly Adirondack at WeeklyADK@yahoo.com