Questions About 1099

Taxes And The Mortgage Interest Deduction

Hooray, it is tax time again.  To commemorate the occasion, let’s review the mortgage interest deduction.  You first must be eligible to file a long form or to itemize.  Paying off your credit cards by refinancing your home mortgage is a  good idea.  Credit card interest is not tax deductible, but home mortgage interest is.  Refinancing your home will enable the interest to be deductible.  If you have to obtain cash in the future, you may always get an advance on a short term loan.

There are deduction limits.  If your eligible mortgage balances are in excess of one million dollars outstanding, only the interest paid on the first million may be deductible.  You must have the mortgage in your name.  The eligible property that has the mortgage should be your primary residence or where you live most of the time.  If two people that are unmarried fit these requirements, you have a choice as to what percentage each one will deduct.  The total claimed by all eligible parties may not exceed the total mortgage interest actually paid.

Generally a Form 1098 is provided to you by the company holding your mortgage.  If your mortgage is sold during the year, you will usually receive two 1098 Forms.  If you hold a mortgage personally for a property you sold, it is easy to prepare the form for your purchaser.  Just because you do not receive a form for a mortgage does not mean it is not deductible.  Any mortgage interest that meets the criteria is tax deductible.  The interest deduction is taken on Schedule A of your personal federal Form 1040.  Only a portion of each mortgage payment is deductible and the rest is a return of the loan principal.

Checkout this tax software as a filing option to accommodate your filing needs.  One price is charged to file both your state and federal returns and all the required forms.  There are no hidden fees and you pay just one price.  Most services do not accommodate even long form filing or state filing for one price.  These are generally extra charge services.

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This entry was posted on Friday, January 27th, 2012 at 6:36 am and is filed under Uncategorized. The entry is tagged under get an advance, Refinancing your home, tax software. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.