You will receive a Form 1099-R for the withdrawals from the IRA in January of 2018. The taxable amount of the withdrawal is reported on your federal tax return and taxed at your current tax rate. Any taxes withheld from the withdrawal will be entered on your tax return as a tax payment (just like from a W-2). If you were under the age of 59 1/2 at the time of the withdrawal there will be a 10% early withdrawal penalty assessed on your tax return and entered as a tax liability. If your total tax payments are greater than your total tax liabilities you will receive a tax refund for the overpayment. If your total tax payments are less than your total tax liabilities you will have taxes owed.
Mortgage interest is entered on a Schedule A as an itemized deduction. Your total itemized deductions must be greater than the standard deduction for your filing status to have any tax benefit.
Standard deductions for 2017
- Single - $6,350 add $1,550 if age 65 or older
- Married Filing Separately - $6,350 add $1,250 if age 65 or older
- Married Filing Jointly - $12,700 add $1,250 for each spouse age 65 or older
- Head of Household - $9,350 add $1,550 if age 65 or older
