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dc3886 | Can you deduct the interest paid on your home for the year before? |
I went to H&R Block last year to get my taxes done and they told me I could not deduct the taxes or interest paid on my home because it was under $10,000 but I was told later that this was untrue. Who is right? If I should have been able to deduct my interest and taxes last year can I deduct them this year?
Additional Details
I know! I've learned my lesson, I should have listened to my parents and went to an accountant. |
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AM-NM centaur
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Bostonia... always provides great answers in the Tax forum. However, he omitted some information.
Look at what your total itemized deductions would have been. Add these numbers together for 2006:
Mortgage interest
Points paid (if you took out the mortgage in 2006
Property taxes
EITHER state and local income taxes OR sales tax
Vehicle registration fees (based on the value of your car/boat)
Medical expenses (that exceed 7.5% of your AGI)
If the sum of all of these is greater than the approximate $10,500 standard deduction, you should file an amended return.
H&R should handle this for free, refund your fees for mishandling your return, and perhaps pay you interest for their mistake.
EDIT:
While many of the prepares at H&R are well qualified, it looks like you found someone from their seasonal employment pool. If you have the wherewithal, consider purchasing a copy of Turbo Tax Premier or TaxCut and do your own taxes. For individual filers, the tax system is not rocket science. But it does require patience to read those lengthy booklets. Once you figure it out, subsequent years get much easier. |
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ninasgramma
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There is no tax benefit to deducting your home mortgage interest unless all of your itemized deductions are more than your standard deduction.
If you were married, your standard deduction for 2006 was $10,300. "It" meaning $10,300 is the total of your itemized deductions. If "it" doesn't total more than $10,300, then your home mortgage interest does not give you any tax benefit.
You deduct interest only in the year you paid it. If you could have benefitted from itemized deductions last year and HRB did not do that for you, go back and they will amend your 2006 return for free and get you an additional refund. |
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MukatA
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You can deduct home mortgage interest only if you itemize your deductions. When you itemize you don't get standard deduction. So you itemize only when your itemized deductions are more than the standard deduction.
You can't deduct interest for the last year now. You must file amended return Form 1040X. |
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bostonianinmo
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If you're married filing a joint return the standard deduction for 2006 was $10,300. If you were single it was $5,150. If your total itemized deductions were less than those amounts then itmemizing would not be worthwhile for you.
What was your filing status and how much was your interest and taxes?
If they did it wrong they should prepare an amended return for you for free. You cannot take the deductions for 2006 on your 2007 return; you must file an amended return for 2006.
Addendum: With your income, medical expenses would have to exceed $3,225 before you could deduct any and then only the excess would be deductible. If your itemized deductions don't exceed $10,300 for 2006 there's no sense in itemizing. Since you don't know what your interest and taxes were, it's not possible to tell you if they made a mistake or got it right. I could guess if I know how large your mortgage was and what your interest rate is but it would only be a guess. |
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Judy1
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What they were saying was if your total allowable itemized deductions were under the standard deduction amount, which was a little over $10,000 on a joint return for 2006, you didn't have enough to itemize. For medical you can only deduct the part that's over 7.5% of your income, so you'd have to subtract around $3225 from what you paid, and could only deduct anything over that. So H&R Block might have been right. Add the amounts up yourself - if your total deductible amount (after subtracting the 7.5% of your income from your medical expenses) is over $10,300, then you would be able to itemize. It's not too late - you can still file an amended return for last year. You'd get back about 15% of the amount you're over the 10,300, so if your itemized deductions are around $12,000, you'd only get $255 if you amended your return, and it might cost that much to have someone prepare it so it might not be worth it. And if your total deductions are under 10,300 you wouldn't get anything back.
But you can only deduct items in the year you paid them, so you can't take things you paid in 2006 off your 2007 tax return. |
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src50
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What they probably meant was that itemizing your deductions was less beneficial than taking the standard deduction. You need to "run the numbers" both ways to see which results in less total tax. |
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wartz
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It sounds like your itemized deductions are pretty close to what the standard deduction is so you need to do some tax planning. Your Block preparer probably came to the correct conclusion but needed planning takes more intellectual heavy lifting than they sell.
If your home mortgage interest AND property taxes AND state income taxes AND charitable deductions AND anything else are over $10,700 in 2007, you can itemize your deductions and come out better than taking standard deduction. If you are close to the line, you can pay your January 2008 payment on December 31 and get 13 months worth of write-offs in 2007. If you can prepay property tax, do that too. (I am in California where the first installment of property tax is due December 10 and the second April 10. Both can be paid December 10 if I wanted to which would throw the whole bill into one year. )
Short version of this story: If you have the funds available, dump a bunch of deductions into one year and take standard deduction the next. |
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dragonchopper
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That is why I don`t go through H&R block. I have my own accountant. We get the interest we put into the house back every year. He get`s back every penny he can for us. |
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