I have heard that after 150,000 of Annual Gross Income (AGI), the mortgage interest you pay on your primary home cannot be deducted fully, is that true? If so what is the formula to use to figure out the actual tax deduction available
2007-08-13 16:34:47 · 5 answers · asked by pinkesh s 1 in Business & Finance ➔ Taxes ➔ United States
If your AGI exceeds $150,500 (married) or $75,250 (not married) then your mortgage deduction (and several other itemized deductions) may be limited.
The deduction is reduced by 3% of the amount by which your AGI exceeds the limits listed above, up to a maximum reduction of 20%.
For example, suppose your AGI is $250,500 (married) and your mortgage interest is $20,000. You exceed the AGI limit by $100,000 and 3% of $100,000 is $3,000. 20% of $20K is $4,000. You take the smaller reduction of $3,000. Your deduction is reduced to $17,000.
Actually a bunch of itemized deductions are grouped together and the reduction is applied to all of them as described above.
2007-08-13 18:49:44 · answer #1 · answered by ninasgramma 7 · 0⤊ 0⤋
Agi Phase Out
2016-11-06 21:01:03 · answer #2 · answered by ? 4 · 0⤊ 0⤋
All itemized deduction are gradually reduced for AGIs in excess of $150,500. The instructions for Schedule A contains a worksheet to calculate the allowable deduction.
2007-08-13 16:47:37 · answer #3 · answered by skipper 7 · 1⤊ 0⤋
it's 150,500 (75,250 if married filing separately) actually, and I've attached a link to the page on schedule a instructions where the worksheet is. Page A-7 of the instructions.
2007-08-13 17:10:26 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Alternative Minimum Tax is what you're talking about, I think.
you can search the irs.gov website for the necessary forms.
btw, the reduction applies to all itemized deductions, not just your mortgage interest, so you'll have to estimate them all in order to figure out the form and rates. [state income taxes and property taxes included]
GL
2007-08-13 16:44:09 · answer #5 · answered by Spock (rhp) 7 · 0⤊ 1⤋