Interest Rate Deduction

NEW -> Contingent Buyer Assistance Program
[quote author="Roo" date=1232768821]Just when I thought I understood, something else comes up. I'm not sure I follow when you say [quote author="awgee" date=1232745961]one must always subtract the applicable standard deduction from the total allowable itemized deductions</blockquote>.



On the federal level: My point is that someone could already pay enough state income tax to be already itemizing, therefore you would benefit (Now I'm scared to right entirely, but I'm thinking it) from the MI deduction. What is wrong with this statement?



On state: From what I said before, because it's a progressive tax rate, you would benefit from the MI deduction at your marginal rate. Is this correct?



Now I have to read more about AMT. Nothing more fun to do on a Friday night!</blockquote>


Not to figure your return correctly. Only to figure whether or not itemizing is advantageous.

My advice: do not read about AMT. Just use TurboTax, answer the questions accurately, and let TT do the calculating.
 
[quote author="ipoplaya" date=1232766286][quote author="awgee" date=1232763127]



Pratically speaking, if the taxpayer has a state income tax deduction large enough by itself to exceed the standard deduction, they are subject to AMT and/or phase out.

Hey, we could do this forever, eh?</blockquote>


We could, I love geeky tax stuff. :)



I disagree though with regards to being subject to AMT. With the higher exemptions via the recent AMT patches, I think there would be a good portion of filers with enough CA state tax to itemize already without the MI deduction but not with significant enough income to incur additional tax liability under the AMT structure. I realize you indicated "and/or", and understand some phase out would be likely, was just making the point for clarification.



This is the case with regards to AMT and my own personal tax situation. Enough state tax to itemize without MI deduction but no AMT tax. This was definitely not the case before the patches though... Hopefully 2009 is the year for permanent AMT tax reform.</blockquote>


We speak geek.
 
[quote author="ipoplaya" date=1232760954]



My take on Roo's question was essentially that if someone was already itemizing, i.e. had enough income such that state tax expenses already made itemizing beneficial vs. taking the standard deduction without the MI, would it be possible the MI would generate a deduction at marginal rates? .</blockquote>


That is the same reason i said it was correct. For 2007, our state income taxes exceeded the standard deduction/exemption so like IPO the interest deduction was a the marginal tax rate. We did get hit with about 250.00 in AMT as calculated by turbotax.
 
<em>My advice: do not read about AMT. Just use TurboTax, answer the questions accurately, and let TT do the calculating.</em>



awgee/IPO - Will Turbo Tax TELL you whether it's better for you to itemize or take the standard deduction? I mean, once you plug in all your numbers?
 
[quote author="Trooper" date=1232804305]<em>My advice: do not read about AMT. Just use TurboTax, answer the questions accurately, and let TT do the calculating.</em>



awgee/IPO - Will Turbo Tax TELL you whether it's better for you to itemize or take the standard deduction? I mean, once you plug in all your numbers?</blockquote>


Yes, absolutely. After you plug in your numbers, it chooses the one that favors you.
 
[quote author="Trooper" date=1232804305]<em>My advice: do not read about AMT. Just use TurboTax, answer the questions accurately, and let TT do the calculating.</em>



awgee/IPO - Will Turbo Tax TELL you whether it's better for you to itemize or take the standard deduction? I mean, once you plug in all your numbers?</blockquote>


I do not know that the results will tell you one is more advantageous than the other. I think it just decides per algorithm which is best. You can easily determine if your return includes itemized deductions by checking to see if it includes a Schedule A.

Sarge, if I remember correctly, you have a rental property. I would not advise a self prepared return using TurboTax.
 
[quote author="awgee" date=1232805390][quote author="Trooper" date=1232804305]<em>My advice: do not read about AMT. Just use TurboTax, answer the questions accurately, and let TT do the calculating.</em>



awgee/IPO - Will Turbo Tax TELL you whether it's better for you to itemize or take the standard deduction? I mean, once you plug in all your numbers?</blockquote>


I do not know that the results will tell you one is more advantageous than the other. I think it just decides per algorithm which is best. You can easily determine if your return includes itemized deductions by checking to see if it includes a Schedule A.

Sarge, if I remember correctly, you have a rental property. I would not advise a self prepared return using TurboTax.</blockquote>




I've used Turbo Tax for years with our rental property. I have to buy an extra edition (sorry, I can't remember what it's called, but I just download the upgrade for a fee). It seems to work fine as long as you have all of the correct information from the time of purchase. Is there something I am missing in doing it this way?
 
[quote author="awgee" date=1232805390]

Sarge, if I remember correctly, you have a rental property. I would not advise a self prepared return using TurboTax.</blockquote>


What's the issue with TT and rental property? Fortunately none of the people I produce returns for are rental owners but I've never heard about problems re: their software in that regard. Heck, they even publicize one of their versions as tailored to rental property owners. Is that just bogus advert and/or false claim? I googled around and couldn't find anything on it.
 
[quote author="ipoplaya" date=1232806333][quote author="awgee" date=1232805390]

Sarge, if I remember correctly, you have a rental property. I would not advise a self prepared return using TurboTax.</blockquote>


What's the issue with TT and rental property? Fortunately none of the people I produce returns for are rental owners but I've never heard about problems re: their software in that regard. Heck, they even publicize one of their versions as tailored to rental property owners. Is that just bogus advert and/or false claim? I googled around and couldn't find anything on it.</blockquote>


That's the version I purchase every year. It seems to ask all of the pertinent questions and definitely helps me not to forget something. I'm curious now.
 
There is nothing "wrong" with the software.

And many people do not answer the questions correctly. And many people answer the questions in a manner they think is the most advantageous instead of accurately.

Many people answer the questions regarding depreciation incorrectly.

I would estimate that last year, about one third of the folks using self-preparation software to prepare their return involving rental property filed their return incorrectly.

And 90% of the folks using self preparation software to prepare a return involving foreign income filed incorrectly.

Until last year, just about everybody who used SPS involving options granted under an employee stock purchase plan or an incentive stock option (ISO) plan, filed incorrectly.

And I could go on.

There is nothing "wrong" with the software, and the software can not protect the taxpayer from themselves. Nor can the software ask a question in a manner that everybody interprets in the same manner. The really smart and tax savy folks answer the questions according to why they think the question is being asked, instead of reading the question correctly.
 
You must log in or register to reply here.
Back
Top