Deductions & credits

No, the energy credit will not impact your itemized deductions. If you meet the requirement of these tax credits, you typically can claim them on your tax return subject to certain limitations. This tax credit directly reduces your tax. For example, if you owe $1,000 in federal taxes but are eligible to claim a $1,000 tax credit, your net tax liability drops to zero. However, the credit is non-refundable credits meaning that they can lower your taxes but won’t result in a refund. You may have the opportunity to roll over unused portions of tax credits to future years, allowing you to use them to reduce your future tax liability.

Please be aware of the following limitations with your itemized deductions:

Please remember the IRS limits your state, local tax, sales, and property taxes deduction to $10,000. Therefore, regardless of the amount actually paid, you can only deduct a maximum of $10,000 for itemized deduction.

If you refinanced your mortgage and used any amount for something else than your home then you won't be able to deduct the interest for that part.

Please go back to the mortgage entry and review the questions after the Form 1098 entry carefully:

1. Login to your TurboTax Account
2. Click on the Search box on the top and type “1098”
3. Click on “Jump to 1098”
4. Click "Edit" to review your 1098 entry and questions.

Please pay special attention to the questions Is this loan secured by a property of yours? and Is this loan a home equity line of credit or a loan you've ever refinanced? since the answers to these questions can disqualify you from the mortgage interest deduction.

Please be aware, these conditions must be met for mortgage interest to be deductible:

• The loan is secured, which means the lender has some kind of guarantee of payment, usually in the form of property. If a borrower defaults on payments, the lender can seize the property that’s securing the loan. If you’re buying or refinancing a home, especially if it’s your first home, the loan is usually secured by the home you’re buying or refinancing.

For tax years 2018 through 2025, you can only deduct the interest from the amount of your loan that was used to buy, build, or improve the home that it’s secured by. If you’ve ever used part of this loan to pay for things other than this home, you cannot deduct the interest from that amount of the loan, even if the transaction didn’t take place this year.

• The home with the secured loan must have sleeping, cooking, and toilet facilities.
• The debt can’t exceed $750,000 (or $1,000,000 if the loan was taken before December 16, 2017) in order to get the full deduction.
• You or someone on your tax return must have signed or co-signed the loan.
• If you rented out the home, you must have used the home more than 14 days during the tax year or 10% of the number of days you rented it out, whichever is greater.

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