If so, would I do it on a 1040? Do I get the whole amount back? If you could just answer to the best of your knowledge. I know that answers isn't for legal advice. I'm jsut trying to get a clue about my mortgage interest deduction. I'm going through the process of trying to do my own taxes and I am a little confused.
2007-02-15 08:40:59 · 9 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
You have to file a Schedule A and itemize deductions. Its not worth it though unless you can deduct more than your standard deduction though.
2007-02-15 08:44:24 · answer #1 · answered by smoothie 5 · 3⤊ 0⤋
If you have enough itemized deductions to make itemizing worthwhile, you can deduct your mortgage interest, among other things such as property taxes and charitable deductions, etc. For a single taxpayer the standard deduction is $5,150. For a married couple, it's $10,300. You need more than your standard deduction amount to make itemizing worthwhile.
The deductions reduce your taxable income so the benefit you get will depend upon your tax bracket. The tax rates vary from 10% to 35% though most taxpayers are in the 15% or 25% brackets. The deductions will reduce your tax bill by the percentage that represents your tax bracket; you do not get it all back.
2007-02-15 16:50:08 · answer #2 · answered by Bostonian In MO 7 · 2⤊ 0⤋
If your mortgage interest, plus all other eligible itemized deductions that you have, total more than your standard deduction, then you can "itemize" on a form 1040 schedule A and take your itemized expenses instead of the standard deduction. On your 1040, instead of subtracting your standard deduction, you'd subtract your itemized total from schedule A instead.
No, you don't get the whole amount back. The amount it saves you would be the amount by which your itemized deductions are larger than your standard, times your tax bracket. So if you're married filing a joint return (standard deduction $10,300), and in the 15% bracket, and your itemized deductions total $12,000, then your savings by itemizing would be $255.
2007-02-15 23:55:42 · answer #3 · answered by Judy 7 · 0⤊ 0⤋
Mortgage interest is reported on Schedule A as an itemized deduction. If you are paying mortgage interest on your principal residence, that means you are also paying property taxes, which is also an itemized deduction (unless you own a condo, in which case, you might not pay property taxes). It will only benefit you to claim itemized deductions if your itemized deductions exceeds the standard deduction for your filing status.
Also, it is a deduction, so you do not reduce your tax liability by the amount of the deduction. Rather, your tax liability is reduced by the amount of the deduction times your marginal tax rate. If you paid $10,000 in mortgage interest, and your marginal tax rate is 28%, that means your tax liability is reduced by $2,800.
2007-02-15 16:51:28 · answer #4 · answered by jseah114 6 · 1⤊ 0⤋
You get to deduct the interest on your mortgage that you paid in 2006 on Schedule A of your 1040. This will flow through to your total deductions from your AGI on page 2 of the return to come down eventually to your taxable income. Which is what your taxes are calculated on. That's it.
2007-02-15 16:49:00 · answer #5 · answered by miketorse 5 · 2⤊ 0⤋
Yes, mortgage interest is deductible from what you owe on your taxes, as well as property taxes you've paid on your home. But you must use the form for itemizing deductions; in other words, the long form. I don't know what the number is. I would suggest that you call your local IRS office. They can help you fill out your taxes and don't charge anything. It's so easy to make mistakes filling out tax forms, I could never do it myself. If you're itemizing deductions, there are many other things you can deduct besides property taxes and interest on your home; such as charitable donations, medical expenses, child care expenses, etc. I would strongly urge you to seek help in order to avoid costly mistakes or delays in getting a refund if you qualify for one. Good luck!
2007-02-15 16:57:26 · answer #6 · answered by gldjns 7 · 1⤊ 0⤋
You have to itemize deductions, not 1040ez form. Get a tax program, like turbo tax. It will walk you through it and calculate if it is better to itemize deductions or use standard deduction. Program is worth the $20 investment. And you can do more than one tax return with it, if you inclined to help family or friends do their returns.
2007-02-15 16:52:22 · answer #7 · answered by Gunny Bill 3 · 1⤊ 0⤋
sched. A - you won't get it all back - it just reduces your taxable income so that you will pay less.
Use Turbo Tax!
2007-02-15 17:40:27 · answer #8 · answered by Dizney 5 · 0⤊ 1⤋
You can file what is called an amended return. Go to www.irs.gov
2007-02-15 16:44:19 · answer #9 · answered by Irish 7 · 0⤊ 4⤋