Property taxes and mortgage interest showing as not allowed or near 0

[HappyW2]

Hi - I own a house in NJ and paid $25k in property taxes and had about $10k mortgage interest.   Is the SALT tax limiting me to $10k max between the two?   So basically 25k of the combined amount is "lost" due to SALT. Not AMT.

[xmasbaby0]

The SALT deduction (state and local taxes) is capped at $10K.  Mortgage interest is not part of the SALT deduction.  That is a separate deduction.  But....unless the combined total of all your itemized deductions exceeds your standard deduction, the itemized deductions will have no effect and the software will just use your standard deduction.

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. The standard deduction makes some of your income “tax free.”  It is not a refund.  You will see your standard or itemized deduction amount on line 12 of your 2023 Form 1040.

2023 STANDARD DEDUCTION AMOUNTS

SINGLE $13,850  (65 or older/legally blind + $1850)

MARRIED FILING SEPARATELY $13,850  (65 or older/legally blind + $1500)

MARRIED FILING JOINTLY $27,700  (65+/legally blind) )  + $1500 per spouse

HEAD OF HOUSEHOLD  $20,800 (65 or older/blind)  + $1850)

[HappyW2]

Hi - so assuming I paid local property taxes of $25k and I am capped at 10k for this line on deductions, why would my mortgage interest of $10k show as 0?   I am not taking a standard deduction, do not have a home office, don't rent out my home and any other reason listed in the turbotax help on why I did not get a full amount of my mortgage interest deduction.  

[xmasbaby0]

Are you using the CD/download?   If so, switch to Forms mode and look at your Schedule A.

[HappyW2]

Thank you! Yes - it is a downloaded version.  Not clear why the software didn't carry my entry on the mortgage lender worksheet to this line on schedule A.  Now TurboTax seems to recognize my total deductions to be SALT of 10K plus the 10k of mortgage interest and agrees that an itemized deduction is better than standard.