Property tax is not affecting my estimated refund

[juggler314]

Hi,

While entering in deductions and credits putting in the mortgage interest properly affected my estimated refund - however when filling in the property tax it has no effect (regardless of whether i set it to 0 or the entirety of my salary). All the other public answers to this question mention it not having an effect unless your itemized deductions are over the standard deduction amount - so lets be clear that's not an issue here - my itemized are well over the standard (just the mortgage interest is several times the standard deduction).

[DoninGA]

Have the itemized deductions reduced your taxable income to zero?  If so, entering more itemized deductions will have no further affect on the tax refund since there would be no tax liability.
To review your Form 1040 using the online editions, click on My Account at the top of the program screen.  Click on Tools.  Click on View Tax Summary.  Click on Preview my 1040.  Scroll down to Line 43.  Is your taxable income zero?

[SweetieJean]

Are you subject to AMT?

[juggler314]

Ah it's the AMT thing - I didn't realize property taxes don't count in AMT calculations. Hmm...this is actually just an exercise for next year so that's good to know. Do you know if it is allowable to divide up property tax paid and mortgage interest paid differently - IE can I have my wife deduct the property taxes since she will not be subject to AMT (we have to file separately for other reasons). I haven't had a mortgage in a few years, but I think it's possible to pay directly into escrow...so if I had my wife write a check specifically to escrow and I wrote mine to the non-escrow part of the payment that should work...things to think about I guess.

Thanks for the quick response - I was wondering where the direct access to 1040 forms was hidden as I suspected it was something like that - hard to debug from the "simplified" view.

[SweetieJean]

If you file Married Separately, you lose a lot of tax credits  Plus, you must split everything 50/50 if you're in a Community Property State. But try it both ways.

[juggler314]

Yeah we know - but the swing is my wife is using the public service loan forgiveness program which forgives student loans (of which she has a lot) and in income based repayment if you file separately they use only your income. Since my income is significantly higher the amount her loan payments would go up would more than offset the other benefits we would get out of it (Student loan interest, higher AMT cap, etc). I've run the numbers and it nets out better this way by a good bit (would be a bump up about 600/month in payments - plus we'd have to switch to the standard repayment plan which basically negates the benefits of the PSLF program . If she moves to a private sector job it will definitely make sense to file jointly. It is a complicated question though as it depends highly on whether we think she'll make it the 10 years to get the forgiveness and what that's really worth looking back on the whole thing...we don't have children or any other deductions though other than state/local taxes (and possibly a mortgage soon). We are not in a community property state.

[SweetieJean · Accepted solution]

Solved in comments.