Is IRS tax form 1040 used?
Q.I realize that intrest paid on a mortgage is a tax deduction. But, how large does the mortgage have to be before a homeowner can claim tne interest? I know a couple who bought a house and they told me that they could not use the interest as a tax deduction because their house was not expensive enough. Is this true or are they just uninformed? Also, is IRS tax form 1040 used? Any help is very much appreciated!
A.It's possible that their interest payments plus all other itemizable deductions were less than the standard deduction, which would make it "not the smart thing to do" to deduct their interest expense. Correct. Make sure you account for all deductions you can take after itemizing, though. In my case, I was suddenly able to deduct things like state income tax that it didn't make sense to deduct before. Don't just calculate the interest on your mortgage and assume you are worse off if it is less than the standard deduction. All of this is done on Form 1040 Schedule A. I think if you get IRS Publication 17, and the instructions for Schedule A, most of these wuestions wil be answered.
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