topic Re: Deductions in Deductions & credits

Deductions

yonik21 — Fri, 19 Mar 2021 19:00:13 GMT

Hi Everyone,

Is there a limit to the following deductions?

1. Mortgage Interest?

2. Property Taxes?

3. Charitable Donations

4. Paying for preschool

With those i go above the standard (Filing Jointly), but turbo tax is not switching to the itemized, and i am wondering if it is due to me hitting the max threshhold?

Re: Deductions

SweetieJean — Fri, 19 Mar 2021 19:27:17 GMT

Property/state/local taxes are capped at $10,000. Preschool is only deductible if it is so that you can work or go to school yourself. You can deduct home mortgage interest on the first $750,000 ($375,000 if married filing separately) of indebtedness. However, higher limitations ($1 million ($500,000 if married filing separately)) apply if you are deducting mortgage interest from indebtedness incurred before December 16, 2017.

More generally, your itemized deductions can only lower your income to zero. If the Standard deduction already does that, itemized ones are of no benefit.

Re: Deductions

Irene2805 — Fri, 19 Mar 2021 20:04:14 GMT

Here is information on the limitations you asked about

Mortgage Interest - For mortgages taken out after December 15, 2017, you are limited to the interest on indebtedness of up to $750,000 if you are filing single, married filling jointly or head of household. ($375,000 if married filing separately) For mortgages taken out on or before December 15, 2017, you can deduct interest on up to $1 million of indebtedness.

Property taxes - There is a $10,000 limit ($5,000 MFS) for property tax and state taxes. You may have heard it referred to as "SALT"-- State And Local Tax. This includes property tax, any state tax paid, and includes any state withholding from your W2s and any 1099s you have.

Charitable donations - In most cases, the amount of charitable cash contributions taxpayers can deduct on Schedule A as an itemized deduction is limited to a percentage (usually 60 percent) of the taxpayer’s adjusted gross income (AGI). There are certain qualified contributions that are not limited.

Child and Dependent Care Credit - The maximimum amount of child care you can use for the credit is $3,000 per child.

For the 2020 tax return, the standard deduction is:

Single or Married Filing Separately - $12,400

Married Filing Jointly or Qualified Widow(er) - $24,800

Heal of Household: $18,600