I took our tax returns to a CPA. Could he be wrong?
2007-03-29 15:33:25 · 8 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
We actually bought the home in July of 2006. I looked at our monthly statement and $1000 of our Mtg. pmt. goes to interest. Does that count for anything?
2007-03-29 15:40:08 · update #1
It depends. Your mortgage interest is deductible as an itemized deduction on Schedule A. However, you won't want to itemize unless your itemized deductions exceed the standard deduction. Since you purchased your home mid-year and have approx. $1,000 of interest per month, you would only have about $6,000 of mortgage interest to deduct on Schedule A, which is fairly close to the amount of a single person's standard deduction. In that case, mortgage interest would not save you any additional taxes you on your return.
It is also possible that your income is high enough that you experienced a phase-out of your mortgage interest deduction. If you believe your CPA incorrectly prepared your taxes, I would suggest asking them specific questions about the calculation, noting that you believe your mortgage interest should have saved you more taxes.
2007-03-29 17:00:53 · answer #1 · answered by milangirl77 2 · 0⤊ 0⤋
Anything is possible. What you need to do though is look over your return and make sure you gave your CPA everything to be sure all income and deductions were reported on the return. Also, a home will help with your income taxes, but depending on when you bought it it might not be much help the first year. With a home purchase you can usually deduct mortgage interest and real estate paid during the year for the home, and if you paid points when you bought the house you can deduct the points in the year of the purchase. If you paid points as part of a refinance of an existing mortgage then you have to write off the points over the life of the mortgage. If you purchased your house late in the year you aren't going to get much for interest or real estate taxes to include on Sch A (Itemized Deductions). Your CPA should also have included as part of your tax return info a 2 year comparison so that you can compare your tax return for the current year to the year before to see what, if anything, changed. Did you make more money than the year before, did you have less withheld for federal, etc.
2007-03-29 15:44:13 · answer #2 · answered by Anonymous · 0⤊ 0⤋
If you closed in July, you probably only made only 4 payments in 2006. You may not have enough itemized deductions to get over the standard deduction. This is very common in the year of purchase. Things should change for 2007 and forward though as you will be paying interest all year.
By the way, the "huge" tax breaks from purchasing a home do not exist.....unless you purchase a home you really can't afford.
2007-03-30 02:01:07 · answer #3 · answered by Wayne Z 7 · 1⤊ 0⤋
Your tax return is very possibly right. Depending on when you bought the house, you might not get any benefit from it the first year since you only had it for part of the year.
Also, sometimes people think a house will bring them thousands of dollars in tax breaks - that would be very unusual, for most people it's more like a thousand or so savings if that - can be less, or nothing. If you don't itemize, you get a standard deduction which for 2006 for a married couple filing jointly is $10,300, which means you get that much even if you don't have any deductions to list - you only benefit from deductions that are MORE than that - and even then you just get a percentage of them depending on your tax bracket, probably 10, 15 or 25%. For example, if you had $18,000 in itemized deductions and are in a 15% bracket, you'd have saved $1155 in taxes.
2007-03-30 04:04:51 · answer #4 · answered by Judy 7 · 0⤊ 0⤋
It sounds like you didn't have the house long enough for that mortgage interest to add up to enough to go above the amount of the standard deduction.
There's no point in itemizing (which you have to do to take the mortage interest off your taxes) if you're better off to take the standard deduction. Even if the interest is $1,000/month, if you owned the house for six months, that's still only $6,000. And my own standard deduction (for a single person) was more than that. So, yes, I can see where that would be the case.
There are other possibilities, but that sounds like the most likely scenario.
Be thankful you don't owe $5k. Being self-employed can be a real kick in the teeth sometimes.
2007-03-29 15:52:43 · answer #5 · answered by ISOintelligentlife 4 · 2⤊ 0⤋
From what you're saying, you owe taxes based on your income in 2006. Your home purchase was in 2007 and will be reflected when you process your 2007 tax return in 2008.
2007-03-29 15:38:11 · answer #6 · answered by Venita Peyton 6 · 0⤊ 1⤋
You will get a tax break next year as you will be able to deduct your property taxes as well as your mortgage interest payments. Good luck.
2007-03-29 15:37:48 · answer #7 · answered by Akbar B 6 · 0⤊ 0⤋
it actually relies upon on the settlement you and he or she arranged to purchase the cellular she would desire to clean all of the taxes till now she would desire to pass identify to you and if she used the funds in the acquisition to try this it's going to have been spelled out in the settlement she does not have clean identify to it till the taxes are paid if the taxes have been secure in the acquisition she could have handled that, if no longer something grew to become into spelled out in the settlement, she is probable leaving the charge of taxes to you
2016-12-19 16:37:37 · answer #8 · answered by ? 3 · 0⤊ 0⤋