My itemized deductions are more than $30,000. Turbo tax says I should use the standard deduction. Why?
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Solved in comments.
Solved in comments.
Because of the new law passed in Dec 2017, if you bought a house after Dec 15 2017, you can only deduct the interest on the first 750K of your primary home, but if you bought the house before that date, you can deduct interest on up to 1M of the loan (Married filing jointly). In my case, the TT automatically used $0 for mortgage interest because I missed the little box in TT that said Adjusted Mortgage interest = 0. So essentially it disregarded my close to $31k in mortgage interest and ended up choosing Standard deduction instead. You have to do some manual math to figure out the 'average' loan balance for the year and divide 1M by that amount to find the proration % of the mortgage interest. Apply that % and then enter the number in the Adjusted Mortgage Interest box (instead of the 0 defaulted by genius TT). Voila, now TT will use the new interest amount and use Itemized deduction instead of Standard. At least this was the problem in my case. Hope that helps
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