There are multiple ways adding in the investment interest expense would not decrease federal tax. A good place to start would be to revisit:
- Form 4952
- Your investment interest expense deduction is limited to your net
investment income.
- If you did not have sufficient net investment income, your investment interest expense would be disallowed and carried forward to 2019.
- Form 1040 line 8
- You are permitted to take the higher of your itemized deductions or the standard deduction.
- Tax Reform increased the standard deduction for all taxpayers in 2018.
- If $6,700 of investment interest expense was allowed but did not push your total itemized deductions over the standard deduction, there would be no drop in tax.
