Why didn't the tax due drop right after I entered some $6,700 of investment interest expense (broker margin interest)?

[Eric0 · Accepted solution]

There are multiple ways adding in the investment interest expense would not decrease federal tax. A good place to start would be to revisit:

• Form 4952
• Your investment interest expense deduction is limited to your net investment income.
• If you did not have sufficient net investment income, your investment interest expense would be disallowed and carried forward to 2019.
• Form 1040 line 8
• You are permitted to take the higher of your itemized deductions or the standard deduction.
• Tax Reform increased the standard deduction for all taxpayers in 2018.
• If $6,700 of investment interest expense was allowed but did not push your total itemized deductions over the standard deduction, there would be no drop in tax.