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One thing you are missing in your first example is the standard deduction.
So using your example, itemizing $15,000 in mortgage interest, $11,000 in property taxes and $3,000 in other expenses would give you a itemized deduction of $29,000, but you won't get the standard deduction, which is $5,800 in 2011, so instead of reducing taxable income by $29,000, it would actually reduce taxable income by $23,200. That would result in a savings of $5,800 federal and $1,589 state. So a bit more than I thought (I brain cramped on the state), but not the $10,000 or $11,000.
Elke brought up a good point which I also forgot, including your state & local taxes. That would now push it back to a ~$10,000 refund. Elke also mentioned AMT, which we spoke about this once; why in the heck has our gov't still not fixed the AMT to include inflation from the last 50 years?!?? That tax was never meant to hit middle class folks. In the example I put up, they will most likely not hit AMT. But if the filer has lots of kids, way more than $3000 in extra deductions or stock options, s/he could possibly fall into AMT territory.
Elke brought up a good point which I also forgot, including your state & local taxes. That would now push it back to a ~$10,000 refund. Elke also mentioned AMT, which we spoke about this once; why in the heck has our gov't still not fixed the AMT to include inflation from the last 50 years?!?? That tax was never meant to hit middle class folks. In the example I put up, they will most likely not hit AMT. But if the filer has lots of kids, way more than $3000 in extra deductions or stock options, s/he could possibly fall into AMT territory.
Would be a bit more, but still likely wouldn't reach $10,000
it would put you back in the 10K territory. NYS tax paid should exceed 5K if you have AGI exceeding 100K.
Either or, all this hypothetical examples....
Anyone who is doing this should sit down wth their actual numbers and work it out, it isn't all that hard to do if you know what you're doing and will give a much better answer than what you'll get here.
main points
you will get something back from taking the deduction, its closer to 1/4-1/3, not the whole thing
you also need to factor in interest expense and a number of other schedule A items.
main points
you will get something back from taking the deduction, its closer to 1/4-1/3, not the whole thing
you also need to factor in interest expense and a number of other schedule A items.
Still depends on AGI and size of deductions - if AMT hits, it can be less or even phased out...
Would be a bit more, but still likely wouldn't reach $10,000
Still, it's $7.5k-$10k more than if s/he were not able to itemize, based on that scenario. The AMT risk is low, but I'm curious to what the accountant told the OP here. OP?
Still, it's $7.5k-$10k more than if s/he were not able to itemize, based on that scenario. The AMT risk is low, but I'm curious to what the accountant told the OP here. OP?
That is true, I was simply stating that it still won't wind up being the full $11,000 (its technically possible, but I somehow doubt someone buying a $340,000 house in Levittown is in the top bracket.
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