I was under the assumption that my mortgage interest deduction would make quite a dent in what we owe tax wise. When we plug in the number it only dropped what we owe by about $250. This doesn’t seem right. We built our house using a construction loan, then refinanced into a 30 year fixed (so I believe we have to say it’s a refinanced loan when Turbo Tax asks about the loan). Is it just not a big deduction or am I missing something?
I was under the assumption that my mortgage interest deduction would make quite a dent in what we owe tax wise. When we plug in the number it only dropped what we owe by about $250. This doesn’t seem right. We built our house using a construction loan, then refinanced into a 30 year fixed (so I believe we have to say it’s a refinanced loan when Turbo Tax asks about the loan). Is it just not a big deduction or am I missing something?
Is it possible you plugged in a monthly number somewhere that expected annual?
How much are your total deductions counting the mortgage interest? Is it possible that you’re otherwise in standard deduction, and the mortgage just barely pushes you above the threshold for doing itemized deductions? If that’s the case, only the portion of the mortgage interest above the standard deduction threshold will appear to “count.”
To elaborate on HT’s point, the standard deduction for a married couple is almost $28k. So, if you don’t have a lot of other deductions (state and local tax deduction is capped at $10k) then your mortgage deduction may serve to just barely get you above the $28k. With the mortgage deduction and itemizing you could only be slightly better off than with the standard deduction. Depends on the size of your state and local taxes, charity, mortgage, and perhaps you have other deductions.
I have found Turbo Tax is terrible. One year (with mortgage deduction), TT said I owed $17,000. I went to a CPA who did my taxes and I ended up getting a few thousand back.
I have found Turbo Tax is terrible. One year (with mortgage deduction), TT said I owed $17,000. I went to a CPA who did my taxes and I ended up getting a few thousand back.
What did the CPA change?
I will play the TurboTax advocate here. Remember, it is only the interest you pay you are deducting. So, if your loan has only been on for part of the year that plays in too. Also, double check the annual/monthly opportunity for making an error. That would be an easy oops to make.
Bottom line, when I have used TurboTax the last 10 years or so, if I simply take my time to go through the questions and answer them carefully, and make sure I go through all sections that actually apply to my situation I have gotten results that would be expected. That being said, my tax situation is not that complicated (single, no kids, one home mortgage, no investment dividends as I use Roth IRA and 401k only at the current time).
Best of luck straightening out your minor conundrum.
To elaborate on HT’s point, the standard deduction for a married couple is almost $28k. So, if you don’t have a lot of other deductions (state and local tax deduction is capped at $10k) then your mortgage deduction may serve to just barely get you above the $28k. With the mortgage deduction and itemizing you could only be slightly better off than with the standard deduction. Depends on the size of your state and local taxes, charity, mortgage, and perhaps you have other deductions.
Once all is said and done we’ll have between $35-40k in deductions so definitely going the itemized route. I guess when it’s all added up it just isn’t quite what I was hoping for🤣. We’re not done yet with the taxes so still plenty of time to play around.
To elaborate on HT’s point, the standard deduction for a married couple is almost $28k. So, if you don’t have a lot of other deductions (state and local tax deduction is capped at $10k) then your mortgage deduction may serve to just barely get you above the $28k. With the mortgage deduction and itemizing you could only be slightly better off than with the standard deduction. Depends on the size of your state and local taxes, charity, mortgage, and perhaps you have other deductions.
Once all is said and done we’ll have between $35-40k in deductions so definitely going the itemized route. I guess when it’s all added up it just isn’t quite what I was hoping for🤣. We’re not done yet with the taxes so still plenty of time to play around.
Seems like your tax savings for itemizing should be ~35% of the difference between your deductions ($35-40K) and the standard deduction ($28k).
It’s the SALT cap that is burning you. Thx republican congress, rep president for that.
I have found Turbo Tax is terrible. One year (with mortgage deduction), TT said I owed $17,000. I went to a CPA who did my taxes and I ended up getting a few thousand back.
What did the CPA change?
$200
I have found Turbo Tax is terrible. One year (with mortgage deduction), TT said I owed $17,000. I went to a CPA who did my taxes and I ended up getting a few thousand back.
What did the CPA change?
$200
What did the CPA change so that you were getting a few thousand dollars back compared to owing $17K ?
I have found Turbo Tax is terrible. One year (with mortgage deduction), TT said I owed $17,000. I went to a CPA who did my taxes and I ended up getting a few thousand back.
What did the CPA change?
$200
What did the CPA change so that you were getting a few thousand dollars back compared to owing $17K ?
I’m guessing user error with turbo tax.
It’s the SALT cap that is burning you. Thx republican congress, rep president for that.
You mean. Thanks dem governors that charge a lot of state tax. It’s not an issue for those that live in low state tax states.
It’s the SALT cap that is burning you. Thx republican congress, rep president for that.
You mean. Thanks dem governors that charge a lot of state tax. It’s not an issue for those that live in low state tax states.
The states that use more federal money than they pay in? Those low tax states?
It’s the SALT cap that is burning you. Thx republican congress, rep president for that.
You mean. Thanks dem governors that charge a lot of state tax. It’s not an issue for those that live in low state tax states.
Colorado has a Dem governor, a relatively low income tax, and is quite low (39th in one study) in how much federal money we receive per dollar we pay in federal taxes.
It’s the SALT cap that is burning you. Thx republican congress, rep president for that.
You mean. Thanks dem governors that charge a lot of state tax. It’s not an issue for those that live in low state tax states.
The states that use more federal money than they pay in? Those low tax states?
The ones that charge their residents more than other states charge their residents. Those states
It’s the SALT cap that is burning you. Thx republican congress, rep president for that.
You mean. Thanks dem governors that charge a lot of state tax. It’s not an issue for those that live in low state tax states.
Colorado has a Dem governor, a relatively low income tax, and is quite low (39th in one study) in how much federal money we receive per dollar we pay in federal taxes.
Exception makes the rule. Ny, ct, nj, ca are more of the rule where the people complain.
It’s the SALT cap that is burning you. Thx republican congress, rep president for that.
You mean. Thanks dem governors that charge a lot of state tax. It’s not an issue for those that live in low state tax states.
Colorado has a Dem governor, a relatively low income tax, and is quite low (39th in one study) in how much federal money we receive per dollar we pay in federal taxes.
Exception makes the rule. Ny, ct, nj, ca are more of the rule where the people complain.
The OP and Hank are in CO (I think). Hence the reference.
But, yes, your generalization is right: liberal states tend to have higher taxes, which is why the Rs capped the deduction. Liberal states also tend to pay more to the Feds (relative to what they get back) which is why they complain about the cap.
The same is probably true for urban/ rural, though I have not seen it expressed that way. That is, urban areas tend to have higher property valuations and skew left. So, even within a state, the cap may tend to favor rural conservatives.
ETA: Urban folks live longer than rural folks, so maybe that evens things out a bit for Social Security and Medicare recipients.
I have found Turbo Tax is terrible. One year (with mortgage deduction), TT said I owed $17,000. I went to a CPA who did my taxes and I ended up getting a few thousand back.
What did the CPA change?
$200
What did the CPA change so that you were getting a few thousand dollars back compared to owing $17K ?
I’m guessing user error with turbo tax.
A $20k change in taxes… YIKES … Can’t wait to hear what was different.
Used Turbo Tax or some other software since, well pretty much they were out, use to do it by hand. The worst part is getting all the documentation togeather, and you have to do that if you go to CPA, then you pay them to enter it into tax software.
Yeah 20k is either user error on TurboTax or the CPA is doing some creative accounting. There is nothing fundamentally specially about TurboTax. You enter your own data into the system and it just spits out the number that the math on the form gives. That’s a pretty substantial claim and would be ripe for a lawsuit/class action if they were making that big of mistakes.
What I have found is that you can run into a situation that you have to go through I think the screen saying that you have health insurance before one of the calculations kicks in which can make it look like you owe a ton but it hasn’t done the calculation yet.
Entering my info, my wife’s business and rental property are easy, the book keeping to get to what you enter into turbo tax is where the pain is.