Which of the following types of taxes are deductible in 2018? Which are deductible FOR and...

Which of the following types of taxes are deductible in 2018? Which are deductible FOR and which FROM AGI?

1. Property tax on real estate

2. Real property taxes on residence

3. Interest on home mortgage

4. Interest paid on a personal residence

5. interest paid on a note to the bank 3/4 of which was used to buy state and municipal bonds, the rest 1/4 to buy stock

Expert Solution

Claiming Home Mortgage Interest

You must itemize your deductions on Form 1040, Schedule A to claim mortgage interest. This means foregoing the standard deduction for your filing status—it's an either/or situation. You can itemize or you can claim the standard deduction, but you can't do both.

Schedule A also covers many other deductible expenses, however, including real estate property taxes, medical expenses, and charitable contributions. Sometimes all these add up to more than the standard deduction for your filing status,

making it worth the time and effort to itemize your deductions. Otherwise, you'll save more tax dollars by skipping the home mortgage interest deduction and claiming the standard deduction instead.

This might be the case in 2018 and going forward through 2025 when the TCJA is set to expire unless Congress renews it. As of 2019, the standard deduction is $6,500 for single taxpayers and married taxpayers who filed separate returns.

It is $13,000 for married taxpayers who filed jointly and for qualifying widow(er)s, and $9,550 for those who qualified as head of household.

The TCJA nearly doubles these standard deductions. They're now $12,000 for single filers and married filers of separate returns, $18,000 for those who qualify as head of household, and $24,000 for married taxpayers

filing joint returns and qualifying widow(er)s. As a result, it might become more unlikely that you'll have enough itemized deductions overall to surpass the standard deduction you're entitled to.

It's usually advisable to complete Schedule A and compare the total of your itemized deductions to your standard deduction to find out which method is most advantageous for you.

ekkarill92 answered 2 years ago

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