Hi, my wife and I will be filing Married Filing Jointly. We purchased our home in December 2023. I'll list out my questions below. Any help would be greatly appreciated! Thank you!
1) We started paying interest on our mortgage in January 2024. What is the best way to figure out if we qualify for Mortgage Interest Deduction or if we would select the Standard Deduction?
2) Our property taxes were paid this month by our mortgage company out of our escrow account. How do we go about taking advantage of a Property Tax Deduction?
3) If we had discount point(s) on our mortgage/interest rate, how do we go about using that as a deduction?
4) My wife and I are expecting a child in late November this year. Other than claiming our child as an additional dependent when go to file our taxes, what else should we be aware of that would benefit us?
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You will enter information regarding your home in the YOUR HOME section of the software, where you will be prompted to enter mortgage interest, property tax and loan origination points paid in 2024.
In late January/early February you will receive a 1098 from your mortgage lender, which will show these amounts.
Go to Federal> Deductions and Credits> Your Home to enter mortgage interest, property taxes, and loan origination fees (“points”) that you paid in 2024 You should have a 1098 from your mortgage lender that shows this information. Lenders send these in January/early February.
As for claiming your dependent who will be born in 2024---you need to make sure that when you enter your child as a dependent, you say the child lived with you for the WHOLE YEAR--even if they are born on December 31; that way you get the child-related credits for the child which can include child tax credit, earned income credit, and childcare credit.
Home Ownership
There is not a first time home buyers credit on a Federal return. That ended in 2010. If your state has such as credit, you will be able to enter it when you prepare your state return.
Buying a home is not a guarantee of a big refund. Your deductions for homeownership combined with your other deductions (if any) must exceed your standard deduction to change your tax due or refund. If you purchased your home late in the year, you do not even have a full year of home
ownership deductions.
Your closing costs on your new home are not deductible except for prepaid interest, prepaid property tax or loan origination fees. There are no deductions for appraisal, inspections, title searches, settlement fees. etc.
Your down payment is not deductible.
Your homeowners insurance for fire, hazard, flood, etc. is not deductible for your own home.
Home improvements, repairs, maintenance, etc. for your own home are not deductible.
Homeowners Association (HOA) fees for your own home are not deductible.
It is very hard for a lot of people to use itemized deductions now that the standard deduction is so much higher. Your home ownership may not have any effect on your tax due or refund, especially if you purchased the house late in the year.
Standard Deduction
Your itemized deductions have to be more than your standard deduction before you will see a change in your tax owed or tax refund. The deductions you enter do not necessarily count “dollar for dollar;” many of them are subject to meeting tough thresholds—medical expenses, for example, must meet a threshold that is pretty hard to reach. The software program uses all the IRS rules that apply to the expenses you enter, and it tells you if you have enough to use your itemized deductions or if using the standard deduction is more advantageous for you. Under the new tax laws, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes.
2024 STANDARD DEDUCTION AMOUNTS
SINGLE $14,600 (65 or older/legally blind + $1850)
MARRIED FILING SEPARATELY $14,600 (65 or older/legally blind + $1500)
MARRIED FILING JOINTLY $29,200 (65 or older/legally blind + $1500)
HEAD OF HOUSEHOLD $21,900 (65 or older/legally blind + $1850)
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