Comments on: How does mortgage interest work when dealing with tax returns? http://www.westvalleypros.com/2009/08/how-does-mortgage-interest-work-when-dealing-with-tax-returns/ Phoenix Short Sales - Phoenix Short Sale Experts - Phoenix Realtor Mon, 04 Oct 2010 16:21:00 +0000 hourly 1 http://wordpress.org/?v=3.1.3 By: Incognito http://www.westvalleypros.com/2009/08/how-does-mortgage-interest-work-when-dealing-with-tax-returns/comment-page-1/#comment-5736 Incognito Fri, 08 Jan 2010 22:29:59 +0000 http://www.westvalleypros.com/2010/01/how-does-mortgage-interest-work-when-dealing-with-tax-returns/#comment-5736 At the end of the year, you will receive a statement from your mortgage company showing the amount of interest you payed on your mortgage for the tax year. This is a deduction from, or a reduction of, your adjusted gross income. It's not a tax credit. For example, if you made $50K, and your mortgage interest was $5,000 for the year, your taxable income would then be $45K instead of $50K. If your tax rate is 10%, your tax liability, or the amount you owe, would be reduced by $500. You will have to file a 1040 form with a schedule A.<br><b>References : </b><br>$50,000 x 10% = $5000 tax liablility $50,000 - $5000 mortgage interest = $45,000 taxable income x 10% = $4,500 tax liability $5,000 - $4,500 = $500 lower tax liability or what is owed to the IRS. My source is 13 years of experience filing my own taxes with the mortgage interest deduction. www.irs.gov At the end of the year, you will receive a statement from your mortgage company showing the amount of interest you payed on your mortgage for the tax year. This is a deduction from, or a reduction of, your adjusted gross income. It’s not a tax credit. For example, if you made $50K, and your mortgage interest was $5,000 for the year, your taxable income would then be $45K instead of $50K. If your tax rate is 10%, your tax liability, or the amount you owe, would be reduced by $500. You will have to file a 1040 form with a schedule A.
References :
$50,000 x 10% = $5000 tax liablility

$50,000 – $5000 mortgage interest = $45,000 taxable income x 10% = $4,500 tax liability

$5,000 – $4,500 = $500 lower tax liability or what is owed to the IRS.

My source is 13 years of experience filing my own taxes with the mortgage interest deduction.

http://www.irs.gov

]]> By: Kim http://www.westvalleypros.com/2009/08/how-does-mortgage-interest-work-when-dealing-with-tax-returns/comment-page-1/#comment-5735 Kim Fri, 08 Jan 2010 22:06:59 +0000 http://www.westvalleypros.com/2010/01/how-does-mortgage-interest-work-when-dealing-with-tax-returns/#comment-5735 http://www.irs.gov/publications/p936/ar02.html<br><b>References : </b><br> http://www.irs.gov/publications/p936/ar02.html
References :

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