Question

4. Refer back to Schedule A, See the small print under Interest You Paid “Caution: Your mortgage interest deduction may be limited (see instructions).”  Explain what the IRS means by that statement.  Be specific.

5. As a result of the TCJA (Tax Cuts and Jobs Act of 2017), more taxpayers will take the standard deduction over the itemized deductions.  State three reasons for this.  Two reasons are based on the work you did in this assignment.  The third reason has to do with the size of the standard deduction (see Forms 1040 for 2017 and 2019; be specific).

5a. Reason 1

5b Reason 2

5c Reason 3

4. Refer back to Schedule A, See the small print under Interest You Paid “Caution: Your mortgage interest deduction may be limited (see instructions).”  Explain what the IRS means by that statement.  Be specific.

5. As a result of the TCJA (Tax Cuts and Jobs Act of 2017), more taxpayers will take the standard deduction over the itemized deductions.  State three reasons for this.  Two reasons are based on the work you did in this assignment.  The third reason has to do with the size of the standard deduction (see Forms 1040 for 2017 and 2019; be specific).

5a. Reason 1

5b Reason 2

5c Reason 3

Answer 1

Ans 4. This part explains what you can deduct as home mortgage interest. It includes discussions on points and how to report deductible interest on your tax return.

Generally, home mortgage interest is any interest you pay on a loan secured by your home (main home or a second home). The loan may be a mortgage to buy your home, or a second mortgage.

One can deduct home mortgage interest if all the following conditions are met. (i) One can file Form 1040 and itemize deductions on Schedule A (Form 1040).   (ii) The mortgage is a secured debt on a qualified home in which you have an ownership interest.

  In most cases, you can deduct all of your home mortgage interest. How much you can deduct depends on the date of the mortgage, the amount of the mortgage, and how you use the mortgage proceeds. If all of your mortgages fit into one or more of the following three categories at all times during the year, you can deduct all of the interest on those mortgages.

Ans 5.

Reason 1: It’s faster. Taking the standard deduction makes the tax-prep process relatively quick and easy, which probably is one reason most taxpayers take the standard deduction instead of itemizing.

Reason 2: It usually gets bigger every year. Congress sets the amount of the standard deduction, and it’s typically adjusted every year for inflation.

  Reason 3: Some people get more (or less). The standard deduction is higher for people over 65 or blind, though filing status is still a factor. And if someone can claim you as a dependent, you get a smaller standard deduction.