Question

Using 2019 IRS forms and the information below, William is 53 and Joyce is 51. They are married. William is a manager for ABC Corporation, a firm that manufactures and distributes widgets. Joyce is a self-employed author of children’s books. The taxpayer wish to minimize their tax by deferring income and accelerating deductions when possible.

The taxpayers paid the following amounts of interest.
Bank of America (4400 Mass Ave.) $5,000
(Mortgage of $50,000)

Sun Trust
(Home Equity Loan of $20,000) $2,000

Nordstrom’s $ 100

Bank of America Mastercard $ 200

The proceeds from the home equity loan were used to build an additional room on the house.

Answer 1

As per federal Taxes The tax payer can claim interest exepense deduction under Itemized deduction where Mortgage Interest deduction and Interest on home equity loan can be claimed

Mortgage Interest can be claimed on first $750000 if married and ($375000 if married filling separtely ) of indebtness ,whereas hiher limit of $ 1 million if indebtness incured before december 2017 with reference to Publication 936 Home mortgage interest

Interest on Home equity loan is allowed as deduction if that debt is used for house purpose , not for paying personal expenses of credit card and car interest

So william and joyse will able to save there money by claiming deduction under itemized deduction on following items

Bank of america mortgage	$5000	Fully allowed
Sun Trust	$2000	It fully allowed as loan used for building additional room
Nordstrom’s		$100 is interest paid for personal expenses not allowed as deduction
Bank of America Mastercard		$ 200 not allowed as deduction as its person expenses intersest payment
Total itemized deduction for interest expense	$7000

So Mr william and Mrs joyse can save $7000 in There IRS Return