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Old 05-27-2016, 03:16 PM   #21
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Originally Posted by lbrjet View Post
Considering only a third of taxpayers have enough deductions to itemize, i have to wonder how many people think they are writing off the interest (because they enter it into Turbo tax or give it to their their tax preparer) but in reality are just taking the standard deduction and getting zero tax benefit.

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Since the increase in the standard deductions so that renters got the same benefit as home owners, most folks who have mortgages don't have enough interest to itemize.

It takes A LOT of interest (especially with today's low rates), real estate taxes, and, charitable contributions to get over the threshold. We had an enormous medical out of pocket expense this year and still was unable to achieve enough deductions to itemize.


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Old 05-27-2016, 03:35 PM   #22
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Originally Posted by Herk7769 View Post
You actually only get "your tax bracket" interest back only in the amount that your itemized deduction exceeds your standard deduction.

For example, the standard deduction for married filing jointly is $12,600.

That means you need to have at least that amount of property taxes, mortgage interest, medical expenses, charitable contributions, etc before you can deduct a cent.

Even then, you only get the discount of your tax bracket's tax rate. If your taxable income is more than $ 37,450 and less than 90,750, your tax rate is 25%.

So assuming you are in that tax bracket, and all your deductions with the RV's interest included is less than 12,600 dollars, every dollar in interest is out of your pocket.

Say you pay lots of mortgage interest, and with the RV's interest of $2000 included, and your deductions will exceed $12,600 dollars by the $2,000 contributed by your RV loan, your tax "savings" will be only $500 of that interest. $ 1,500 of it will still be "out of pocket".

Worse yet, as your loans age, the tax deduction reduces every year till it disappears even though you are still paying the same amount due to more principle being paid and less interest.

The sales tax deduction has to also pass a "test". You can only deduct the higher of your state income tax OR your sales tax based on your gross income plus the sales tax on "large ticket" items like a house, car, boat, or RV; not both.

Financing ONLY because "you can write off the interest" is not good money management. If you have to anyway, you "MAY" get a small financial benefit depending on your particular financial circumstances and where you live.

Additionally, you can only write off the interest from financing the TRAILER in a 5th wheel or Travel Trailer. The truck's interest is NOT deductible. ALL of the motorhome is because it is all one item.
This is why I don't deduct mine. I don't have enough deductions to get past the standard deduction. I used to pay a cpa $175 per year to do my taxes and then I noticed that he filled the 1040ez for me, so no more of that.

I just don't have any deductions. It takes a lot to get to the thresh hold.

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