I’ve always itemized in the past, but with the recent tax code changes we don’t have enough deductions to do that this year. When I imported last year's return, TT H&B carried forward my lenders in the Deductions and Credits of the Personal section. One lender is for the loan, and one is for points being amortized from the original lender (the original lender sold the loan after we refinanced, but we still have that same loan so we are amortizing the points we paid).
Before realizing we wouldn't have enough deductions to itemize, I entered all our PERSONAL deductible expenses like I’ve always done (medical, charity, mortgage interest, taxes, etc.) but the total was less than our standard deduction. So we will use the standard deduction, but I didn't go back and remove any of the deductions I entered because I like keeping all those numbers in one place and having the details I document about them.
Moving on... when working on our Home Office expense for our business, the real estate taxes and interest carry over from the Personal Deductions and Credits, just like they have in years past, and TT H&B automatically does those calculations based on the office percentage. However, this is the first year we haven’t been able to itemize and I’m now in uncharted territory when it comes to handling this.
TT H&B is telling me that if I am NOT itemizing then I shouldn’t enter the taxes and interest in the places they usually get transferred to automatically from the Personal section, and instead to enter these amounts as “Excess taxes and interest”.
This is incredibly confusing. I would expect TT to see that I’m not able to itemize and would do what needs to be done automatically, at least up until the point that my itemized deductions exceed the standard deduction.
The instructions are clear enough but I still don’t understand what is happening behind the scenes. What does entering these things as “Excess” do and how does it affect my taxes? Is this supposed to be the FULL amount of property taxes and interest that was reported on 1098, or do I have to do some calculating to determine this "Excess"?
The place it says NOT to enter mortgage interest currently shows the amount that was entered in the Deductions and Credits section and doesn't allow me to remove it. Do I need to delete the lenders in the Deductions and Credits section that are “linked” to the home office, and then manually enter the FULL tax and interest paid amounts in the Home Office section as Excess tax and interest? What about the other deductions I’ve entered (medical, charity…)? Do they need to be removed as well so TT doesn’t think I’m trying to itemize?
What about the points being amortized? Is that considered Excess too?
Some additional clarity and guidance would be greatly appreciated!
Thanks in advance for your help!
