African American Homeowners Top 6 Most Missed Tax Deductions

A U.S government report estimates the average person pays $400 each year because of missed tax breaks and savings incentives (401K, Roth IRA and IRA plans). African Americans pay even more because of a lack of knowledge of current tax laws - and lack of money to hire professional consultation.

For example, according to a 2002 Government Accounting Office report, would you believe nearly one million people failed to itemize there home mortgage interest? This alone cost those homeowners over $473,000,000? (Ouch!)

One of the biggest advantages of home ownership continues to be the generous tax deductions the Federal and State Governments allow you to take each year. But despite the generosity of the government (how often do you hear that statement) many Black homeowners miss money saving deductions each year.

Another key to taking the best advantage of owning a home is tax planning. The best way to use your home to lower your tax burden next year is to start planning this year. Take the time to consult with a qualified tax planner to set up an effective action plan.

Here are points to consider when preparing your taxes this year and developing a tax plan for next year. Make sure you consult with a qualified tax professional before acting on any of these suggestions.

1. Federal Tax Credit for Energy Efficiency.

A tax credit can give you a major savings. A tax credit will lower the income tax you'll have to pay. The difference between a tax deduction and a tax credit is major. A tax deduction only reduces your income taxable income, a tax credit brings down the tax itself (big difference).

Note: As of this writing, 2007 is the final year to claim a tax credit for an energy efficient home improvement. You have until April 15, 2008 to take advantage of this tax credit on your 2007 income tax return for home improvements done on your personal home that qualify.

2. Missing or Misusing the Earned Income Tax Credit.