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How to Use Deductions on a Tax Return

Can I claim my mortgage or other interest expense as a deduction?

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  • Art Auerbach

    Tax Director, Goodman & Company, LLP

    http://www.goodmanco.com/  
     

    Serving clients since 1932, Goodman & Company brings 75 years of knowledge and experience to the demands of today's ever-changing business environment. Throughout the past 75 years, we've never strayed from our mission-to provide each client with personal, high-quality service using the most up-to-date technology and resources.

  • Can I claim my mortgage or other interest expense as a deduction?

    Basic information to prepare an individual income tax return, Form 1040 and the basic schedules. This video is designed for those individuals who want to undertake the preparation of their tax return. There are tips and pointers for those who have attempted this feat in prior years.

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  • Transcripts

    Host:Can I claim my Mortgage or other interest expense as a deduction?

    Arthur Auerbach: Mortgage interest is definitely a deduction. There are certain other interest expenses that are deductions. Personal interest on Credit cards is not deductible at all. Now some folks, who are listening may have self employed businesses and you use a Credit card for that self employed business to pay for business expenses and you carry a balance on that card. That interest is business interest. That should be deductible on Schedule C not on Schedule A. Mortgage Interest adds up the forms that you get from your Mortgage companies. First, second, home equity lines, couple of things to remember here. There are two lines on Schedule A. One line is where the forms that you get from your Mortgage holders. So you add those up. If you are paying a Mortgage to the person from whom you purchased the house, they took back the financing that goes on a separate line on Schedule A. And the last category of interest would be investment interest. So I borrowed money to buy Stocks and Bonds, for example, when on margin at a brokerage house, that is called Investment Interest. That's deductible only to the extent that I have investment income, that is dividends and interest from the Investment account. So there are categories of interest on Schedule A, the most obvious one is Mortgage interest and please remember to watch the forms that you get from your Mortgage holders, because the first copy of that form went directly to the Internal Revenue Service. So make sure you get that number correctly done because that's part of a document matching program that IRS does.

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