Alright, I am finisheing up my tax return and need claificiation on something. Figured there are few tax heads in here. I have itemized deductions that are (mortgage interest, etc) that are less than $4850. According to the IRS, i do not have to fill out a 1040 nor fill out Schedule A because they are less than $4850. I am planning on taking the standard deduction of $4850, but what happens to my mortgage interest? Can I not claim that? Where would happen to it? Any help is appreciated!
No you can't. You would have to itemize to claim your mortgage interest, which means no standard deduction. You know you can deduct your property taxes too right?
Wow, I forgot about prop taxes. Does it matter if the mortgage co. acted as an escrow and then paid them for me? It shouldn't right? I just do not remember seeing anything from my county tax office indicating the amount of taxes I paid. Is it a numbered form, or just some sort of receipt?
The idea behind the standard deduction is that if you don't want to itemize or your itemized deductions aren't that high, the IRS is willing to assume that you had a certain amount of qualified expenses throughout the year. Be sure to consider all of the possible deductions on the Schedule A. Did you have medical expenses? Did you pay for your medical insurance pre or post-tax? Did you make financial contributions to a charity or religious organization? Etc.
You should have received a receipt by January 31. You may be able to find it on HCAD if your mortgage company didn't send you a statement.
The only other thing I have is a tuition and fees deduction. That is for AGI. Thanks for youall's help. I will look for the tax receipt. That should put me over the $4850 mark.
Don't forget you can include state and loacl taxes paid, or if you are in a state (like Texas) you can do sales tax. goto the IRS site and it will list a standard deduction for your state sales tax based on your AGI and your exemptions.
Funny I have never heard of being about to deduct state and local taxes. This is can be done only if you are itemizing? Is this a standard deduction, again, I have not done that before.
It is an itemized deduction.....basically what it sounds like you could itemize is: mortgage interest property taxes state sales tax (based on the IRS tables) charitable contributions (any cash or non-cash) If those add up to more then then the standard deduction of $4,850 then you itemize, if not you take the standard deduction.
Yeah it may not be used much in states without taxes, but I know here in Ohio state taxes are usually 3-5% of income and city taxes are 2%. Yes it's when your itemizing Schedule A line 5. The sales tax is new this year. You can eithe rtotal up all yoru sales tax paid (really only makes sense if you made some large purchases) or the IRS has a table to take a "standard" deduction for sales tax based on income and number in your household. I'm sur eit's used much more in Texas and Florida. I've only used it a couple times (one client in Texas, another client who is self employed and forgot to pay estimated state/local taxes).
There should be a receipt. Check with the county and your local school district, because you can write those off too (and MUD taxes if you live in a MUD district)
When you got your 1098 (the form that they sent you with the mortgage interest on it) it usually come with a detail on what was paid out of your escrow account. This detail will show what all taxes were paid.
Things to not forget to itemize: 1. Property tax: This includes any MUD taxes, county taxes, and school district taxes. If you can't find your receipt you can go online and get them off the tax assessor website or the hcad website and print them. 2. Charitable contributions. 3. Any interest on your homeloan you paid over the year. 4. Medical 5. For the first year ever, you can deduct sales tax. If you haven't saved all of your receipts over the year, the IRS has a handy table based on your income. There are other things to deduct, but these are pretty basic. If all of these things add up to more than the standard deduction, then itemize, if not, then take the standard deduction. ALSO...don't forget your personal exemption. There are education credits if you have tuition as well.
What do you mean by personal exception? Also I do have education expenses but I am not sure if I should claim a lifetime credit or not. My employer gave me roughly $10000 for education expenses, however after $5,500 I had to pay tax on the rest of it. The tax was taken out of my check every month. I can claim that tax right? If so where, and if I do then what happens to the lifetime credit? This is getting very confusing! But it is fun figuring this out by myself.
Nevermind the personal exception. Figured that out after reading through the form! Any help with education taxes is appreciated! See above.
As I understand it, what you are saying is that your employer gives you an education benefit. It is something in addition to your salery. But it has value and the IRS will want a piece of it sooner or later. It looks like they took their piece sooner in that your employer calculated what you should pay in taxes for it and already sent that in. On your 1040 your income ammount would not include that education benefit so you don't get to deduct that tax anywhere but you also don't have to report that income anywhere so everything is even. The same would go for medical and dental insurance if they don't include it in your income. If, however, they paid your taxes only on your salery and then in addition took out your medical insurance (for example) then you could claim your medical insurance costs along with your other medical costs as a deduction. PLEASE NOTE, unless your employer takes the taxes out of your income before taking out your insurance costs OR you spent a lot of time in the hospital (having a baby, for example) you probably won't have enough medical expenses to qualify to deduct them. They have to come to a certain percentage of your total income (Is it 7%?). Anything less than that the IRS thinks of as a cost of living. If you are close or think you should qualify, you should listen to the tele-tax recording because there are a number of details to this deduction. Insulin can't be counted but traveling to a health conference for an ailment you or someone you are caring for has can be deducted. Doctor prescribed weight management programs can be deducted but not self-prescribed ones like joining Weight Watchers to look great on the beach.
You can deduct all local and state sales tax on your federal tax return. It really was designed to help out folks that live in states without state income tax that get most of their taxes from sales tax. So you can do it if you live in Texas on your Federal return...but there are other states that can do it too...in fact, if you live in a state with both sales tax and income tax, you can deduct both. The appropriate forms and charts are on the IRS website.
