Misunderstood the mortgage interest deduction

[FoBoT]

i don't see the problem, if you don't exceed the standard deduction, then that is just still better for now, but next year once you have the full year you can itemize

i don't think you are looking at it correctly

 

[kranky]

PEOPLE, IF YOU DON'T KNOW WHAT YOU'RE TALKING ABOUT, DON'T GIVE ADVICE! PLEASE!

Man, there's so much wrong info in this thread I don't know how the OP will ever get things straight.

 

[dmw16]

If I could get a decent house for $150k I wouldn't complain about tax breaks. A so-so condo where I live costs almost $300k. But like everyone else said, just itemize. If you have over $5100 in deductions its worth it.

 

[bobdelt]

Originally posted by: AndrewR

Originally posted by: EstimateMe
Looks like $500 is the MAX for charitable contributions? Church giving along with stuff given to Goodwill?

I think the rule is anything OVER $500 (ie., first $500 has no benefit, but after that is deductible). Could be wrong -- my mother-in-law is a tax accountant so I don't do my own taxes!

nope... the rule is that you just need receipts over that amount (or maybe its 250), you can deduct up to 30% or 50% of your agi depending on the item and how its treated.

 

[bobdelt]

Originally posted by: dmw16
If I could get a decent house for $150k I wouldn't complain about tax breaks. A so-so condo where I live costs almost $300k. But like everyone else said, just itemize. If you have over $5100 in deductions its worth it.

he's marriend, he needs 10300 to itemize. And this year its 5150 if youre single.

 

[EagleKeeper]

Look at your state income taxes.
Those also will come under the 1040 - Schedule A.

Be careful about the home office deductions - the IRS is very tight on what is allowed - must be for the convinence of the employer, not just convient for you. Always best to have a piece of paper stating such.

As others have stated, spend the $20 for tax S/W; it will walk you through the process of getting deductions.

W/ respect to charity.
The first $500 does NOT have to be itemized. there is (30 or 50%) limit on what you can donate - however, there are come restrictions on determining value.

Educational costs can be deducted on a Form 2106 after the 2% rule. All valid business expenses will also go on this.

Closing costs on the house (government fees, anything that states the word Tax) become deductable from the closing statement. Points (loan originaion fees) will also be deductible.

 

[Scarpozzi]

I wouldn't itemize if I didn't have to. It's a lot of hassel for little or no gain. But that's just my opinion.

I bought a house and though I'd be able to itemize....but found out within the first year that my starter home isn't nearly expensive enough for me to itemize.

 

[alm4rr]

go read IRS Publication 17

 

[rivan]

Originally posted by: AnonymouseUser
Itemize already!

I don't know why you're having a problem - the deduction for me was awesome when I was 24, single and had a $55k house

 

[49erinnc]

Originally posted by: DogFromDuckhunt

Originally posted by: bctbct
medical costs exceeding a certain percentage of your income is also deductible.

They must exceed 7.5% of AGI, and you must deduct your reimbursements from the amount you paid out as well. IE - you Pay $1000 for a prescription and your insurance reimburses you $700, only $300 would be available for the deduction (and even then, you have to exceed the 7.5% hurdle rate). You lump all medical expenses into one large sum (Dental, Eye, etc.)

I know we're gonna have a huge tax thread soon but can someone tell me if the above 7.5% can include office visit copays and prescription copays? I had surgery this year and my out of pocket just around/slightly over 7.5% of my AGI. But I was wondering about the small stuff like the copays to definitely get me over that 7.5%. Also, can you apply your deductible (mine is $1,000) to that 7.5%? I haven't kept all my office visit and prescription copays receipts so I'm hoping doctors/pharmacy can provide me with that info.

 

[EagleKeeper]

Yes

 

[49erinnc]

Originally posted by: EagleKeeper
Yes

Forgot to ask:

Does the 7.5% only include what you've actually paid or just what your expenses are? For example, I have several thousand dollars in out-of-pocket medical expenses due from procedures done in 2006. However, I am making monthly payments and will be doing so for many months. Am I only allowed to deduct what I've actually paid thus far or can I deduct what is actually owed?

Sorry for the thread hijack but I'm trying to get my ducks in a row early since I've had so many medical issues this year.

 

[Toasthead]

where the heck do you find a $150k house???

 

[iamwiz82]

Originally posted by: Toasthead
where the heck do you find a $150k house???

Another california-centric mind :roll:

 

[EagleKeeper]

Originally posted by: 49erinnc

Originally posted by: EagleKeeper
Yes

Forgot to ask:

Does the 7.5% only include what you've actually paid or just what your expenses are? For example, I have several thousand dollars in out-of-pocket medical expenses due from procedures done in 2006. However, I am making monthly payments and will be doing so for many months. Am I only allowed to deduct what I've actually paid thus far or can I deduct what is actually owed?

Sorry for the thread hijack but I'm trying to get my ducks in a row early since I've had so many medical issues this year.

You incurred the costs in 2006 - that is when they are deductible

 

[ajf3]

If you pay your 2007 property/school/county taxes before Jan 1, you can add them to your deductions for 2006. A lot of people do this every other year so that they can itemize in those years - then they use the non-itemized std ded in the alternating years.

 

[dullard]

I've said that time and time again. Heck, I've even posted about it on ATOT. Yet the myth stays on.

1) First year you often don't get to deduct since it often wasn't a full year.

2) The deduction only kicks in after your standard deduction. So, the deduction is often only a very small fraction of what you thought it would be.

If you are in this situation, the best you can do is pre-pay your real-estate taxes. Pay double in one year, and pay nothing at all the next year. That way, you take the itemized deduction for more tax savings when you double your real-estate tax. Then the next year you'll have almost nothing to deduct and you still take the high standard deduction.

 

[nakedfrog]

Originally posted by: Toasthead
where the heck do you find a $150k house???

$150k would buy me a pretty nice house. I paid about half that for the house I have now.

 

[Fingolfin269]

This will be the first year I have the opportunity to take advantage as well. I made the mistake of not holding on to every house payment notification since I have it set to autopay online. Do mortgage companies typically send out summaries at the end of every tax year? Along the same lines as an employer?

Not sure that it will matter this year anyway since I did not start paying until August. The good thing is that I am single so my standard deduction is not that high to begin with relative to the cost of the house (~$150k).

Might actually have to talk to an account this year.

 

[Fingolfin269]

Originally posted by: iamwiz82

Originally posted by: Toasthead
where the heck do you find a $150k house???

Another california-centric mind :roll:

They always like to ask the question too. I wonder if it is an ego thing as if the rest of the country wants to share in their high property costs.

 

[dullard]

Originally posted by: Fingolfin269
This will be the first year I have the opportunity to take advantage as well. I made the mistake of not holding on to every house payment notification since I have it set to autopay online. Do mortgage companies typically send out summaries at the end of every tax year? Along the same lines as an employer?

I've always gotten summaries at the end of the year mailed to me. Heck, my online sites show a summary for me if I ever wanted to print it out myself.

 

[EstimateMe]

Thanks for all of the help guys, doesn't look like the sky is falling after all

I had a few questions after a day of thinking about it.

1. If we filed "married filing seperately," could my wife take the standard $5150 deduction on her part, along with the $3300 personal exemption, while I itemized (can probably come up with $11k to itemize this year) and claimed the $3300 personal exemption as well? In our case this might be the best, since she had a definite smaller income than I did.

So basically: Wife takes standard deduction and exemption
while
I itemize my deductions (~$11k) and personal exemption

I don't even know if this is allowed. Just wondering since even though both of our names are on the deed, mine is "first" and the mortgage rate was determined off of my credit score since I made more money.

2. Is there anyway to take my closing costs, taxes paid, and mortgage interest from this year, and "roll them over" to 2007? In other words since we haven't lived here the whole year, could we take advantage of 18 months of mortgage interest on next years taxes?

 

[EstimateMe]

Originally posted by: EstimateMe
Thanks for all of the help guys, doesn't look like the sky is falling after all

I had a few questions after a day of thinking about it.

1. If we filed "married filing seperately," could my wife take the standard $5150 deduction on her part, along with the $3300 personal exemption, while I itemized (can probably come up with $11k to itemize this year) and claimed the $3300 personal exemption as well? In our case this might be the best, since she had a definite smaller income than I did.

So basically: Wife takes standard deduction and exemption
while
I itemize my deductions (~$11k) and personal exemption

I don't even know if this is allowed. Just wondering since even though both of our names are on the deed, mine is "first" and the mortgage rate was determined off of my credit score since I made more money.

2. Is there anyway to take my closing costs, taxes paid, and mortgage interest from this year, and "roll them over" to 2007? In other words since we haven't lived here the whole year, could we take advantage of 18 months of mortgage interest on next years taxes?

bump, wondering if anybody knew about this

 

[EagleKeeper]

Originally posted by: EstimateMe
Thanks for all of the help guys, doesn't look like the sky is falling after all

I had a few questions after a day of thinking about it.

1. If we filed "married filing seperately," could my wife take the standard $5150 deduction on her part, along with the $3300 personal exemption, while I itemized (can probably come up with $11k to itemize this year) and claimed the $3300 personal exemption as well? In our case this might be the best, since she had a definite smaller income than I did.

So basically: Wife takes standard deduction and exemption
while
I itemize my deductions (~$11k) and personal exemption

I don't even know if this is allowed. Just wondering since even though both of our names are on the deed, mine is "first" and the mortgage rate was determined off of my credit score since I made more money.

2. Is there anyway to take my closing costs, taxes paid, and mortgage interest from this year, and "roll them over" to 2007? In other words since we haven't lived here the whole year, could we take advantage of 18 months of mortgage interest on next years taxes?

If one takes the itemization, the other MUST take the itemizations.
Items showing on the Schedule A must be split.
If the expenses are directly related to a person's income, then they are assigned to that person.
If the items are shared; then the expense must be split evenly.

In general, one can not claim expenses for a year different than when they occurred or were paid.

Therefore both fudge factors that you are asking about will not work.

 

[kyparrish]

good luck!