@lotothezo-gmail- wrote:
Thank you! So yes for 2020, if I pay the lumpsum then it will trigger itemized deductions for this year, without paying the interest this year, it will keep me below the standard deduction limit. Based on the math I could lump sum the 20ish k or defer and pay an additional couple grand in taxes for 2020.
For income tax purposes only, interest is deductible when it is actually paid. There might be advantage to paying in 2020, or paying in 2021 along with your 2021 interest, that can only be assessed by someone with all your tax facts. If late payment triggers penalties, those penalties are not tax-deductible.
Separately, how's your credit report? Planning any borrowing in the next couple of years? There may be important non-tax reasons to pay the debt on time.
