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ragaei
New Member

When entering the property taxes paid of $23000, the federal amount didn't change. I am itemizing, >$600K gross income, $29K interest which helped with tax due

I have Entered mortgage interest paid which changed the federal amount owed. I then entered the property taxes paid, nothing changed. I am itemizing, didn't sell any stocks, but we have a > $600K of gross income. I thought the $10K limit applies no matter how much you make. Is that true? 

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Accepted Solutions
MichaelMc
New Member

When entering the property taxes paid of $23000, the federal amount didn't change. I am itemizing, >$600K gross income, $29K interest which helped with tax due

The $10,000 limitation on the deductibility of state and local taxes applies to income taxes and property taxes, and alternatively, to sales taxes.

Based on what I have been able to learn about you from your question, I suspect that when you entered the information from your Form(s) W-2, you may have had more than $10,000 in state income tax withholding. If that was the case, when you entered your real estate taxes, the cap had already been exceeded, so the real estate taxes resulted in no change to your itemized deductions or the amount of federal income tax.

Your home mortgage interest caused a change in your federal taxes, because interest is not capped by the amount of interest, but by the principal amount of the mortgage.

"For qualifying debt taken out on or before December 15, 2017, you can only deduct home mortgage interest on up to $1,000,000 ($500,000 if you are married filing separately) of that debt. The only exception is for loans taken out on or before October 13, 1987; see Pub. 936 for more information about loans taken out on or before October 13, 1987."

"For qualifying debt taken out after December 15, 2017, you can only deduct home mortgage interest on up to $750,000 ($375,000 if you are married filing separately) of that debt."


Source: IRS Pub. 530 Tax Information for Homeowners




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3 Replies
SweetieJean
Level 15

When entering the property taxes paid of $23000, the federal amount didn't change. I am itemizing, >$600K gross income, $29K interest which helped with tax due

Is the $23k just on your personal residence(s), or a rental property?
ragaei
New Member

When entering the property taxes paid of $23000, the federal amount didn't change. I am itemizing, >$600K gross income, $29K interest which helped with tax due

yes , it is for primary residence.
MichaelMc
New Member

When entering the property taxes paid of $23000, the federal amount didn't change. I am itemizing, >$600K gross income, $29K interest which helped with tax due

The $10,000 limitation on the deductibility of state and local taxes applies to income taxes and property taxes, and alternatively, to sales taxes.

Based on what I have been able to learn about you from your question, I suspect that when you entered the information from your Form(s) W-2, you may have had more than $10,000 in state income tax withholding. If that was the case, when you entered your real estate taxes, the cap had already been exceeded, so the real estate taxes resulted in no change to your itemized deductions or the amount of federal income tax.

Your home mortgage interest caused a change in your federal taxes, because interest is not capped by the amount of interest, but by the principal amount of the mortgage.

"For qualifying debt taken out on or before December 15, 2017, you can only deduct home mortgage interest on up to $1,000,000 ($500,000 if you are married filing separately) of that debt. The only exception is for loans taken out on or before October 13, 1987; see Pub. 936 for more information about loans taken out on or before October 13, 1987."

"For qualifying debt taken out after December 15, 2017, you can only deduct home mortgage interest on up to $750,000 ($375,000 if you are married filing separately) of that debt."


Source: IRS Pub. 530 Tax Information for Homeowners




View solution in original post

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