1st year Mortgage interest and Tax Returns | TigerDroppings.com

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Jblac15
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Member since Mar 2011
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1st year Mortgage interest and Tax Returns



Just filed my taxes on TurboTax. After reading this forum, it seemed like the most economical way to do them since my situation isn't very complicated (25 year old, married with a house). I do however have one question.

I bought a house in 2012, and paid approx. $5,000.00 in mortgage interest. After entering that in TurboTax, it made $0 difference in my return. I was under the impression that I should get a good chunk of that back, but I guess the program doesn't lie? FYI I ran my taxes through it twice and came up with the same result each time.

I talked to a guy from work who also bought a house last year, and he got back a lot of the interest he paid. I don't know how his income compares to mine.







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SLafourche07
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re: 1st year Mortgage interest and Tax Returns


You probably didn't have enough deductions to itemize. When you take the standard deduction you don't get to take deductions such as the mortgage interest deduction.





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LSURussian
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re: 1st year Mortgage interest and Tax Returns


It's exactly what the previous poster said.

A little more detail: since you are married and probably filing a joint return, you receive a standard deduction of $11,900 for 2012. That means you get to subtract $11,900 from your adjusted gross income regardless of whether you have any deductions which you can itemize.

If you only had $5,000 in mortgage interest, which you can deduct, you would need more than $6,900 of other deductions (unreimbursed medical expenses, charitable contributions, etc.) before itemizing your deductions would benefit you rather than taking the standard deduction.

I use TurboTax also and it asks you through the interview process all the questions pertaining to deductible expenses for which you can itemize. The software then compares if your itemized deductions would exceed the standard deduction ($11,900) and if they do not, then it automatically uses the standard deduction.

You saw no change in your taxes with the $5,000 mortgage interest entry because you didn't have enough other deductions to bring your total itemized deductions to over $11,900.






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tirebiter
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ATL
Member since Oct 2006
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re: 1st year Mortgage interest and Tax Returns


quote:

you would need more than $6,900 of other deductions (unreimbursed medical expenses, charitable contributions, etc.)


Property taxes and state & local income taxes are normally big contributors to bridge the gap. Many who have refi'd or got very low purchase rates in recent years may struggle to hit the threshold to itemize. With no mortgage and lack of ability to itemize for 2012 the state r*ped me on this return primarily due to a shite ton of dividend income. GA tax code is unforgiving regarding investment income unless one is 62 or older.






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dewster
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Tennessee
Member since Aug 2006
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re: 1st year Mortgage interest and Tax Returns


Russian, I never exactly understood that either. Thanks for clearing that up.

I'll be filing jointly next year, but my property taxes, mortgage int., what's left of my student loans, and other deductions may only barely surpass the standard deduction.

To the OP, if you have an FHA loan, I think you can deduct the PMI for a year or two. Still won't get you over the standard deduction though.



This post was edited on 4/2 at 9:33 am


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yellowfin
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re: 1st year Mortgage interest and Tax Returns


quote:

I'll be filing jointly next year, but my property taxes, mortgage int., what's left of my student loans, and other deductions may only barely surpass the standard deduction.


good news is student loan interest is above the line and not figured into the standard deduction


bad news is they have limits on deducting them






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LSURussian
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Member since Feb 2005
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re: 1st year Mortgage interest and Tax Returns


quote:

Russian, I never exactly understood that either. Thanks for clearing that up.

You're welcome.

(Poodle will be along shortly to correct the errors in what I wrote.... )






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Poodlebrain
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re: 1st year Mortgage interest and Tax Returns


In addition to the $5,000 of mortgage interest expense you should have real estate taxes associated with your home ownership that are deductible, and you may be able to deduct any qualified mortgage insurance premiums paid. You can also claim a deduction for any state income tax withheld from your, or your spouse's, wages, and/or any state income taxes you paid.

The other common deduction is for contributions to charities. Contributions can be in cash, or they can be non-cash. When taxpayers move into a new home it is common for them to donate all sorts of goods to charities to get rid of stuff they feel they will not need, or plan to replace.

Taxpayers filing married filing joint need to have more than $11,900 of itemized deductions in order to benefit from itemizing. You might want to give your return a third pass through TurboTax and pay more attention to these items. Good luck.






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LSURussian
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re: 1st year Mortgage interest and Tax Returns


quote:

You might want to give your return a third pass through TurboTax and pay more attention to these items.
During the "interview" process which TurboTax uses, it asks the user questions regarding all of those items you listed.

For example after asking if the taxpayer has a mortgage on his home and the answer is 'yes', it asks the user how much interest was paid. Then it will ask if the user was required to have mortgage insurance, yes or no? If the user answers yes, it then asks how much was the mortgage insurance. Then it will ask about property taxes on the home or any other real estate. And so on....

If the user understands what is being asked (may be a big "if" in some cases), then the software is pretty comprehensive in identifying deductible expenses.






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Poodlebrain
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Way Right of Rex
Member since Jan 2004
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re: 1st year Mortgage interest and Tax Returns


quote:

During the "interview" process which TurboTax uses, it asks the user questions regarding all of those items you listed.
I know, but it asks them expecting a "yes" or "no" response. Sometimes the answer is "it depends on the circumstances", and if you do not know when this is the appropriate answer you are at the mercy of the software engineers rather than the accountants who work for Intuit.

I can get the same return from TurboTax that I get from Lacerte (the software I use professionally) which is also an Intuit product. The problem is that I get the same result from entering information directly to the forms based on my experience. I have tried to get the same returns using the interview process, but it only works for the simplest of returns. I have serious issues with the accuracy of TurboTax returns when the taxpayer is in alternative minimum tax.






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LSURussian
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re: 1st year Mortgage interest and Tax Returns


Good to know. Thanks!





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12Buck
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Baton Rouge
Member since Jul 2005
576 posts

re: 1st year Mortgage interest and Tax Returns


You saying I can deduct all those things that I donated to good will?





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RickAstley
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Reno, Nevada
Member since May 2011
1630 posts

re: 1st year Mortgage interest and Tax Returns


Yes you can. My coworker gave me a full spill on how he does his charitable deductions. I would advise you keep some paperwork handy on what you donated, and its estimated costs. I believe there is a list of estimated prices for each particular item you donate that can be used. You can go through all of the inventory you donate, and sum up the values according to the estimated price of each donation, and then hold onto the information for tax returns.





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