Bought House - Tax question on Itemized deduction

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FB01
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Bought House - Tax question on Itemized deduction

Post by FB01 »

Hi,

I used to do Standard deduction for my taxes before used Turbo Tax. I bought a house this year so planning to do itemized.

What kind of itemized deduction can I get after buying house? As will be filling for the first time with itemized, not sure if that is advantageous to me.

Thanks,
JR
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Smorgasbord
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Re: Bought House - Tax question on Itemized deduction

Post by Smorgasbord »

Your mortgage lender will send you a form listing how much interest you paid (and PMI if you're paying that too). You simply enter those numbers into Turbo Tax and it will evaluate if you should itemize or just take the standard deduction. For what it's worth, I bought a house in 2009 and have yet to itemize because the standard deduction has always been better.
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BL
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Re: Bought House - Tax question on Itemized deduction

Post by BL »

The IRS website is a good place to get acquainted with. This should give you a start. Print out a Schedule A to look at while you study this:
https://www.irs.gov/instructions/i1040sca/ar01.html
delamer
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Re: Bought House - Tax question on Itemized deduction

Post by delamer »

Mortgage interest and property taxes are the two big home related deductions.

If you pay state income taxes, those are deductible too.

If the itemized deductions are greater than the standard deduction, then you should itemize.

Since you are using tax software, it will figure out which options saves you the most money.
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psteinx
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Re: Bought House - Tax question on Itemized deduction

Post by psteinx »

If a new house purchase has pushed you up into the territory of likely itemizing for the first time, then yeah, you should probably review schedule A and the instructions for it. Some big categories of common deductions:

* Other taxes paid (potentially, property (i.e. your new house), personal property (your car(s)), state income tax or sales taxes (I think this last is sort of either/or, but you should research for yourelf)

* Charity
clydewolf
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Re: Bought House - Tax question on Itemized deduction

Post by clydewolf »

delamer wrote: If you pay state income taxes, those are deductible too.
[
Or Sales tax if they are greater.

And while itemizing, don't forget your charitable contributions to many organizations.

You may qualify for medical deductions too, but it is a bit complex and has a theshold of 10% of your AGI before dedutions are allowed. Also there are miscellaneous expenses that have threshold of 2% of your AGI.
[/quote]
pshonore
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Re: Bought House - Tax question on Itemized deduction

Post by pshonore »

And there's always the technique of "bunching" deductions in alternating years to get more itemized deductions in one year and then taking the standard deduction the following year. For example paying 1.5 years of property tax one year and .5 the next when you take the standard deduction. Lots of threads on that topic.
livesoft
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Re: Bought House - Tax question on Itemized deduction

Post by livesoft »

You paid quite a lot of money for tax information from the IRS whether you use it or not, so here is IRS Publication for Homeowners:

https://www.irs.gov/pub/irs-pdf/p530.pdf

Study it and be ready for the test in a few weeks. After reading it, you should be able to answer all questions for new homeowners on the forum. :)
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grabiner
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Re: Bought House - Tax question on Itemized deduction

Post by grabiner »

For your property taxes, check the actual bill, not just the amount paid. Property taxes are deductible, but some cities, counties, and states put things on the tax bill which are not taxes, and thus are not deductible. (For example, my property tax bill includes a charge from the county for trash service. The mortgage lender pays the whole bill from escrow, and reports it as a tax payment, but part of it is not deductible.)
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BL
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Re: Bought House - Tax question on Itemized deduction

Post by BL »

By understanding this now, you may be able to come up with more and also more accurate deductions. Thus understanding taxes can save you money, not just for tax preparation.
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