Tax Question

[dxkj]

I was trying to do some of the math and couldn't quite wrap my head around it. We are considering buying a house, and I just wanted to know the pro's to put against the con's


The standard deduction for a married couple is 9700, or if filling seperately 4850.

If the amount of interest paid on the house in a year is $10,000, then by filing jointly, and using that as your sole deduction, you only end up 300*.20 = 60 ahead on your return.


Is it possible to file seperately and have the first person claim the standard 4850, and the second person to claim the house interest, at 10,000. That would put it 5150 * .20 = 1030 ahead (which is more significant)


Or am I looking at this all wrong?

 

[vi edit]

Property taxes are also deductable. That alone could be $1000-$10,000(or more) depending on location and value of the property.

 

[kranky]

Yes, remember to ADD the mortgage interest to your other deductibles. Property tax, state/local income tax, charitable contributions make up the bulk of them for most people.

 

[dxkj]

Originally posted by: kranky
Yes, remember to ADD the mortgage interest to your other deductibles. Property tax, state/local income tax, charitable contributions make up the bulk of them for most people.

So Take 10,000 + 3,000 property tax + (state/local income tax is deductable?), + charitable contributions.


Ok, but does it make more sense to file seperately because of the difference of one person the 13+k - 4850, instead of 13+k - 9700

 

[lightpants]

Don't forget to start your home based business - That is where you will find deductions galore😉

 

[anno]

if you're itemizing, you can deduct your state income tax too, which boosts the number more. providing you have state income tax.

course.. the biggest advantage is that you have the house..

there is no tax advantage for us anymore.. the standard deduction keeps going up and the mortgage interest keeps going down, at this point the standard deduction is a better deal.

edit: I guess you'd need to do the taxes both ways and see which way came out better.. I haven't tried them that way in several decades because we've only had one income for several decades, so things could have changed in that regard but when we did have two, it worked out better for us to file jointly.

you need to remember that the tax is different (more) if you're filing seperately than if you're filing jointly.. although that's not as significant as it looks at casual glance either.. 25.00 more tax on two 50k incomes than on one 100k income..

you'd be able to deduct more state tax if you file jointly.. you can't deduct hers if she's not itemizing.. that might make enough difference to make it a wash..

 

[EagleKeeper]

If both are on the note, the interest and property taxes must be split if you choose to file seperately.

Also, both must itemize.