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

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1 Best answer

New Member

Jun 1, 2019 11:49:06 AM

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

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.

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.

New Member

Jun 1, 2019 11:49:06 AM

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

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.

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.