TT did not recognize my home mortgage interest deduction and is directing me to take the $24K standard deduction for married, filing jointly. My state and property taxes exceed the $10K cap, and my charitable contributions total $6716, and that is what they are saying in the summary (a total of $16, 716 in itemized deductions, hence the standard deduction). However, although my home mortgage interest is properly entered, it is not recognizing it. If that is counted (along with a child credit and foreign tax credit), I would exceed the $24K standard deduction. I have already filed. Why isn't TT recognizing the mortgage interest?
The Child Tax Credit and the Foreign Taxes Credit are not used as itemized deductions.
The total of all your itemized deductions, SALT capped at $10,000, Mortgage Interest, Charitable donations have to exceed the standard deduction for your filing status to have any tax benefit.
Look at Schedule A of your tax return. Click on Forms in the upper right of the desktop program screen. The Schedule A will be listed on the left side of the Forms mode screen.
After you entered the relevant information, did you come across a screen like the one in the screenshot below?
I was unable to reproduce a scenario where, when properly entered, the mortgage interest did not factor into the standard/itemized deduction calculation.
so is your mortgage interest $7,300 or more? if not, standard beats itemized. in forms mode look at schedule A. if it's more but not showing up on schedule A, you entered something incorrectly. have you run updates?
Mortgage interest on personal use real estate, such as your primary residence or 2nd home is reported on SCH A. There is a $10K cap on the amount of *PERSONAL* mortgage interest you can claim. Additionally, there is a $10K cap on the amount of state and local taxes (SALT) that you can claim. All of this goes on the SCH A.
Now, until the total of all *allowed* itemized deductions on the SCH A exceed your standard deduction, the standard deduction is better for you. The itemized deductions *do* *not* *help* until they exceed your standard deduction.
So if filing joint your standard deduction for 2018 is $24,000. So if your itemized deductions do not exceed that, there is no need for your to itemize at all, since the standard deduction will be the better deduction for you.
$10K cap on personal mortgage interest? what code section are you referring to? IRC 163(h)(3) only limits the principal amount , generally $1 million, so if you had a $2 million mortgage and paid $100,000 in interest, 1/2 or $50,000 would be deductible
Schedule A does not show up in the forms menu. I verified that the mortgage interest ($8906) did show up in the deductions summary screen, but it obviously was not counted ($10K cap on SALT + $6716 in charitable contributions = $16,716). If counted, total would be over $25K, and put me into itemized mode, which may open up other deductions. So I still don't know why TT didn't count the mortgage interest.
Why don't you take a look to see what is happening ...
How to change between the Standard Deduction and Itemized Deductions
For the Desktop program
If it's giving you the Standard Deduction and not showing you Schedule A you can check it 4 ways.
1 You can switch to Forms Mode and open A from the top of the left column Open Form and pick schedule A out of the list on the right side.
2 The easiest way is to go up to Show Topic List on the top bar and scroll down the list to
Standard Deduction vs Itemized Deductions
That takes you directly to the
The Standard [or Itemized] Deduction is Right for You screen
3 You can check the actual amount of itemized deductions by going up to Search and type in
itemized deductions, choosing
Then click on Jump to itemized deductions
Click on "Change my deduction.
4 OR go up to Federal (Personal for H&B)
Deductions and Credits
Click on Done with Deductions at bottom
Continue on though 3 screens and you will get to the Standard Deduction is right for You screen
That will display the actual amount of itemized deductions vs. the standard deduction. (Be sure to uncheck "Change my deduction" after checking it so you do not lock in the wrong deduction.
OK, I took some of the suggestions above and took a look and now I see what is happening. The schedule A form is definitely not recognizing the home mortgage interest that I input from my 1098. It clearly states a 0 amount even though I did input the correct amount ($8906) into the deductions area of TT. It then adds up the $10K SALT cap amount, the $6716 charitable contributions and the incorrect $0 from the mortgage interest to get a total of $16716, which is less than the $24K standard so that is why it is giving me the standard deduction. So I go back to my original question: why isn't TT recognizing my mortgage interest as a deduction? I dug a bit deeper into some of the instructions from the TT program, and read under some special circumstances sections that "if you used part of your home for business (such as a home office), record all of your home's home loan interest when you enter your home office expenses. TT then prorates your home loan interest between your home office and your personal home based on the square footage of your office." My wife used part of our home for her home business, and when she listed the office expenses she took the $1500 simplified deduction rather than itemizing everything separately. Could that be the reason why the home mortgage interest is showing up as a $0 on the Schedule A form? I figure that I will have to file an amended return to get the deductions we're qualified for, but I need to know how to get the home mortgage interest properly entered because it seems like I have. Thanks.
Yes ... review the form 8829 for the home office ... part of the taxes and mortgage interest is used there and the personal portion is sent to the Sch A ... so review your entries there to see if you indicated to not pass the personal portion to the Sch A.
I reviewed form 8829, and there is no indication of mortgage interest (MI) nor any mention of carrying over MI to Schedule A. I went back to the home expense deduction section of TT and backtracked to where it gives you the choice of using the simplified method or listing your own expenses. I experimented with the option to list your own expenses, and on the screen that wants to confirm how MI applies to the home office, the total MI for the home shows up, and I checked the "yes" box because I want to itemize. It says the program automatically calculates how much of the MI can be deducted for the home office, then adds the remaining interest to Schedule A. Well I checked the Schedule A form, and no mortgage interest was added. There is also a screen that asks about excess MI, but it says it exists if you have a mortgage, and we are NOT itemizing, but we want to itemize so I am selecting "no". Meanwhile, my refund automatically went down from what it was when we took the standard deduction, but as explained above, the figures I am entering total above the 24K standard deduction, so that doesn't make sense. What now?
Sorry but the new forum style doesn't always alert to a new post ... may I suggest removing the Mortgage interest in both the Sch A & 8829 sections ... restarting the computer and then re-entering it in only the Sch A section ... somehow you have messed up something and confused the program.