I purchased a home in 2018 with a mortgage that exceeds $750k. For my Federal return, I'm aware that I can only deduct interest I paid up to the $750k principal limit, and Turbo Tax indicates that I will need to manually calculate this amount and enter the lower amount into Turbo Tax (for example, my 1098 says I paid $26,000 in interest, but I calculated that only $23,000 is allowed to be deducted).
For New York State, their tax laws indicate that even though for Federal purposes mortgage interest is limited, these tax law changes do not apply to New York State. The problem I'm having is that I reduced the amount of interest when I itemized my Federal taxes in Turbo Tax, but there doesn't seem to be an option in Turbo Tax to correct the deduction on my New York State tax return to be the actual amount of mortgage interest I paid.
Has anyone experience this and can explain to me how to increase the mortgage interest deduction on my state and local taxes within Turbo Tax? Thanks!
You don't have to worry about any adjustment on the NY side, the program will do it for you. When going through the mortgage interest interview screen Form 1098 (on the federal side) you are entering two numbers: the amount from 1098 ($26,000) and your adjusted amount ($23000). Schedule A (federal) will show $23000, while NY Form IT-196, line 10 will have the $26,000 amount. Once completed, you may confirm this by viewing your .pdf file if you are preparing online, of check in forms if you are using desktop.
So I have a similar question, however it is for my Alabama State return.
I understand that most of the state return information is transferred from the Federal return....and the 2018 tax code allows for a Federal standard deduction of $24,000, which nullifies the fact that I pad $8,700 in mortgage interest and then zeroes this out on my Federal summary. When the information is carried over to my Alabama State return, it is showing that I paid $0 in mortgage interest, and it absolutely will not let me change / remedy this.
Can you help?
It should also transfer. I suggest you go back through your entries for the 1098 Mortgage Interest statement (on the federal side) to confirm all the questions are properly answered. Alabama complies with federal law for this deduction, so make sure you have answered the questions properly as to whether the mortgage secures your primary residence. Also, make sure it is interest for acquisition cost and not an equity or cash out refinance used for other purposes than to buy, build, or improve your home.