I am confused. I bought a 1st house and paid about $4k in interest according to form 1098. Does that mean I get all of that back in a refund? I entered all my info in H&R Block and it says I OWE $20.00!! How can I owe if this whole mortgage interest is supposed to be refundable?
2007-01-30 01:19:01 · 6 answers · asked by Sean R 2 in Business & Finance ➔ Personal Finance
Mortgage interest is duductible, not refundable. This means if you paid 4,000 in mortgage interest and made 50,000 for the year in salary, you only pay taxes on 46,000 of your salary (50,000 - 4,000). Also, you need to itemize your deductions to do this. With only 4,000 in interest, you may be better off not itemizing and taking the standard deduction. Try both ways to see which is better.
2007-01-30 04:33:53 · answer #1 · answered by Cardinal Rule 3 · 4⤊ 0⤋
Why exactly do you think you should get your mortgage interest back at the end of the year?
Who do you think gives it back to you? Banks obviously wouldn't make money if they gave back all the interest. And if you think the government does, why do you think all the other taxpayers want to pay your mortgage interest?
The government allows you to take your mortgage interest as a tax deduction. This means it lowers your taxable income. You'll probably lower your taxes by about 30% of the total mortgage interest you paid for the year because of this.
I would suggest you run HR Block without the mortgage interest, and you'll find you would have owed even more.
2007-01-30 09:43:28 · answer #2 · answered by Quixotic 3 · 3⤊ 1⤋
You are confused. The $4k you spent on interest on your mortgage is deductible not refundable. In other words, based on your salary you owe a certain amount. Because of the interest paid was $4k, you deduct that from what you owe. You owe $4k less because of the interest. But, you still owe taxes.
2007-01-30 09:29:47 · answer #3 · answered by penhead72 5 · 1⤊ 1⤋
The mortgage interest (and any property taxes ect..) is deducted from your income. Thus if you didn't pay enough Federal taxes you will still owe after deductions
2007-01-30 09:29:12 · answer #4 · answered by kerfitz 6 · 0⤊ 0⤋
Mortgage interest is not refunded, it is tax deductible. to add insult to injury your standard deduction is probably higher than your itemized deductions this year. Standard deduction is 5150 ( single) 10300 ( married) use whichever is higher.
2007-01-30 10:34:00 · answer #5 · answered by Vincent B 1 · 1⤊ 0⤋
You get to deduct it only if you itemize. If you itemize you may not even have enough to equal more than the standard deduction. You have to see which way works best.
2007-01-30 11:18:59 · answer #6 · answered by parsonsel 6 · 1⤊ 0⤋