Mortgage Interest Deduction

[Nci-Consulting]

Can I carry forward unclaimed home mortgage interest paid from prior years, like Charitable donations, and if so, how many years can I go back?

[xmasbaby0]

No you cannot do that.   You can only enter the mortgage interest on a tax return for the year in which it was paid.  if you forgot to use it on a past tax return you can amend a tax return as far back as 2017 if necessary.

Be aware that for 2018 and beyond it became much harder for most people to use the interest as an itemized deduction because the standard deduction nearly doubled.

STANDARD DEDUCTION

Many taxpayers are surprised because their itemized deductions are not having the same effect as they did on past tax returns.  The new higher standard deduction and the elimination of certain deductions, as well as the cap on state and local taxes have had a major impact since the new tax laws went into effect beginning with 2018 returns.

Your itemized deductions have to be more than your standard deduction before you will see a change in your tax owed or tax refund.  The deductions you enter do not necessarily count “dollar for dollar;” many of them are subject to meeting  tough thresholds—medical expenses, for example, must meet a threshold that is pretty hard to reach. (Only the amount that is MORE than 7.5% of your AGI counts)   The software program uses all the IRS rules that apply to the expenses you enter, and it tells you if you have enough to use your itemized deductions or if using the standard deduction is more advantageous for you.  Under the new tax laws, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes.

Your standard deduction lowers your taxable income.  It is not a refund.  You will see your standard or itemized deduction amount on line 12 of your 2020 Form 1040.

2020 Standard Deduction Amounts

Single $12,400   (+ $1650 65 or older)

Married Filing Separate  $12,400   (+ $1300 if 65 or older)

Married Filing Jointly $24,800   (+ $1300 for each spouse 65 or older)

Head of Household $18,650  (+ $1650 for 65 or older)

2019 Standard Deduction Amounts

Single $12,200   (+ $1650 65 or older)

Married Filing Separate  $12,200   (+ $1300 if 65 or older)

Married Filing Jointly $24,400   (+ $1300 for each spouse 65 or older)

Head of Household $18,350  (+ $1650 for 65 or older)

2018 Standard Deductions:

Single   $12,000  (+ $1600 65 or older)

Married Filing Separately    $12,000  (+ $1300 65 or older)

Married Filing Jointly  $24,000  (+ $1300 each spouse 65 or older)

Head of Household  $18,000  (+ $1600 65 or older)

Look at line 8 of your Form 1040 to see your standard or itemized deductions

2017 Standard Deductions

Single    $6350  (65 or older + $1550)

Married Filing Separately   $6350  (65 or older +  $1250)

Married Filing Jointly           $12,700  (65 or older + $1250@)

Head of Household $9350  (65 or older + $1550)

(Also + $1600 if blind)

Select your tax year for amending instructions:

• 2020
• 2019
• 2018
• 2017

    What does it mean to "amend" a return?

·         Do I Need to Amend my Tax Return?

[Opus 17]

No. Any expense that might be a tax deduction can only be claimed in the year it occurs. The whole point of the standard deduction is to give taxpayers some break without having to account for every penny of expenses. You can’t claim the standard deduction in one year, and then also bring itemized deductions forward that you didn’t use and combine them when it is to your advantage.  You are certainly allowed to itemize every year if you choose.

[Nci-Consulting]

Thank you all!!