Is the mortgage interest and property tax paid every year counts toward the standard deduction? For example, the standard deduction is about $10700, and my mortgage interest and pro. tax is combine is about $8000, will my total deduction be $10700 or $18700? Thanks
You can either take the standard deductions or itemized deductions, but not both. So if you were to itemize your deductions, and all you claimed were your mortgage interest and property taxes, your deduction would be $8,000 (so obviously, you would want to take the standard deduction of $10,700).
Correct. The standard deduction is used when you can not itemize your deductions to a greater amount than the standard deduction. If your property tax, sales tax, interest expense, investment losses, etc. are more than the standard deduction, you would then go to the itemized deductions and use those instead. Don't forget your personal exemptions, you get those either way you go.
just remember that if you pay a m.u.d. tax that it is separate and does not count towards tax reduction.
Why would it not be deductible (the MUD). Any local taxes based on value of real property by city, county, district or municipality are deductible from the federal return, I thought.
so to answer my example question, if my total deduction is only 8000 (mortgage interest and property tax included), then I will use the standard deduction which is about 10700? Is this correct? Thanks
If that's your only deduction. Otherwise, look for $2,701 worth of additional deductions... or get TurboTax and let it do it for you.
I'm pretty new at this tax thing as well. I was reading about itemized deductions and had a few questions. Let's say that my total tax deduction was $20,000. If my gross income was $100,000 and I paid $30,000 of federal taxes, does this mean that I'll get $20,000 back? Or do you get a percentage of the $20,000. It would be really helpful if somebody could explain each step of this process.
In a nutshell, if your income was $100,000 and your deduction totals $20,000, then you would subtract that from your income giving you a "net" of $80,000. You then look up the tax you should have paid on $80,000 and subtract that from the $30,000 you paid. That is what you get back.
Yeah. A lot of people get confused over what a 'deduction' actually is. A deduction is not a deduction from the dollar amount of taxes you pay, but rather a deduction from the total amount of income you declare as 'taxable'. And yes, let TurboTax do it all for you.
