Is Mortgage interest accrued after a December payment tax deductible?
I have a Mortgage that I make monthly payments on. In December 2018, I made a payment toward that mortgage part way through the month (let's say December 15th for simplicity). The interest is compounded daily. Is the interest that accrues from the 16th until the end of the month tax deductible for 2018 even though I won't actually be paying that interest until 2019?
In short, is the interest calculation required for Federal USA taxes based on payments in 2018 or based on interest accrued in 2018?
income-tax
asked yesterday
morsecodermorsecoder
1234
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add a comment |
I have a Mortgage that I make monthly payments on. In December 2018, I made a payment toward that mortgage part way through the month (let's say December 15th for simplicity). The interest is compounded daily. Is the interest that accrues from the 16th until the end of the month tax deductible for 2018 even though I won't actually be paying that interest until 2019?
In short, is the interest calculation required for Federal USA taxes based on payments in 2018 or based on interest accrued in 2018?
income-tax
asked yesterday
morsecodermorsecoder
1234
New contributor
morsecoder is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
add a comment |
I have a Mortgage that I make monthly payments on. In December 2018, I made a payment toward that mortgage part way through the month (let's say December 15th for simplicity). The interest is compounded daily. Is the interest that accrues from the 16th until the end of the month tax deductible for 2018 even though I won't actually be paying that interest until 2019?
In short, is the interest calculation required for Federal USA taxes based on payments in 2018 or based on interest accrued in 2018?
income-tax
asked yesterday
morsecodermorsecoder
1234
New contributor
morsecoder is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
I have a Mortgage that I make monthly payments on. In December 2018, I made a payment toward that mortgage part way through the month (let's say December 15th for simplicity). The interest is compounded daily. Is the interest that accrues from the 16th until the end of the month tax deductible for 2018 even though I won't actually be paying that interest until 2019?
In short, is the interest calculation required for Federal USA taxes based on payments in 2018 or based on interest accrued in 2018?
income-tax
income-tax
asked yesterday
morsecodermorsecoder
1234
New contributor
morsecoder is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
asked yesterday
morsecodermorsecoder
1234
New contributor
morsecoder is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
asked yesterday
morsecodermorsecoder
1234
New contributor
morsecoder is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
asked yesterday
morsecodermorsecoder
1234
asked yesterday
morsecodermorsecoder
1234
1234
New contributor
morsecoder is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
New contributor
morsecoder is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
morsecoder is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
add a comment |
add a comment |
2 Answers
2
active
oldest
votes
In short, is the interest calculation required for Federal USA taxes
based on payments in 2018 or based on interest accrued in 2018?
Interest paid. The IRS cares about actual amounts paid for individual tax returns. This is the same reason your W-2 reflects the sum of your paychecks for the tax year without factoring in any partial pay-periods in Jan/Dec.
answered yesterday
Hart COHart CO
32.6k57692
1
You may not be able to claim that ~15 days interest for December of 2018, but next year, you'll be able to recoup that with claiming the whole of the interest on your January 15, 2019 mortgage payment, rather than just claiming the last 15 days of accrual that accrued only in 2019.
– Milwrdfan
yesterday
1
Also, the 1099 issued by your mortgage company will specify how much mortgage interest you paid in the year.
– Xalorous
12 hours ago
add a comment |
If you want to maximize the payment of mortgage interest in a particular year (for example you might be bundling deductible expenses in odd years and taking the standard deduction in even years), it might be useful to make an extra payment on the last business day of the month, or to prepay interest.
If you haven't intentionally done that, accrued interest is not deductible.
answered 8 hours ago
Nathan LNathan L
29.9k1675130
Makes me wonder. If I were to pay ahead, and was careful not to have the payments credited as principal, if a large number of December payments (or a large check of payment X 12) would have prepaid interest all be deductible in that year? This would make a great “grouping” strategy for those who border on the std deduction.
– JoeTaxpayer♦
8 hours ago
1
@JoeTaxpayer I think you can, I wonder how long before that avenue also gets closed, but for now it seems to meet the letter of the law.
– Nathan L
7 hours ago
(tangent from main Q/A, sorry) - I pay my annual ($18K+) health insurance in advance every other year, and use a charitable acct to do the same for donations. Adding mortgage to this would get me an nice every other year large itemized Sch A, and a $24K std deduction, in odd years. That will partially even the game on capped SALT.
– JoeTaxpayer♦
7 hours ago
Yeah, bundling won't work for me, but it works great for my dad. I gave him a loan at the end of the year to double up his deductions and we got him a nice Roth conversion tax free. If he can hang on until he's 90, we can probably get all of his money moved without incurring any extra taxes.
– Nathan L
7 hours ago
add a comment |
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2 Answers
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active
oldest
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2 Answers
2
active
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In short, is the interest calculation required for Federal USA taxes
based on payments in 2018 or based on interest accrued in 2018?
Interest paid. The IRS cares about actual amounts paid for individual tax returns. This is the same reason your W-2 reflects the sum of your paychecks for the tax year without factoring in any partial pay-periods in Jan/Dec.
answered yesterday
Hart COHart CO
32.6k57692
1
You may not be able to claim that ~15 days interest for December of 2018, but next year, you'll be able to recoup that with claiming the whole of the interest on your January 15, 2019 mortgage payment, rather than just claiming the last 15 days of accrual that accrued only in 2019.
– Milwrdfan
yesterday
1
Also, the 1099 issued by your mortgage company will specify how much mortgage interest you paid in the year.
– Xalorous
12 hours ago
add a comment |
In short, is the interest calculation required for Federal USA taxes
based on payments in 2018 or based on interest accrued in 2018?
Interest paid. The IRS cares about actual amounts paid for individual tax returns. This is the same reason your W-2 reflects the sum of your paychecks for the tax year without factoring in any partial pay-periods in Jan/Dec.
answered yesterday
Hart COHart CO
32.6k57692
1
You may not be able to claim that ~15 days interest for December of 2018, but next year, you'll be able to recoup that with claiming the whole of the interest on your January 15, 2019 mortgage payment, rather than just claiming the last 15 days of accrual that accrued only in 2019.
– Milwrdfan
yesterday
1
Also, the 1099 issued by your mortgage company will specify how much mortgage interest you paid in the year.
– Xalorous
12 hours ago
add a comment |
In short, is the interest calculation required for Federal USA taxes
based on payments in 2018 or based on interest accrued in 2018?
Interest paid. The IRS cares about actual amounts paid for individual tax returns. This is the same reason your W-2 reflects the sum of your paychecks for the tax year without factoring in any partial pay-periods in Jan/Dec.
answered yesterday
Hart COHart CO
32.6k57692
In short, is the interest calculation required for Federal USA taxes
based on payments in 2018 or based on interest accrued in 2018?
Interest paid. The IRS cares about actual amounts paid for individual tax returns. This is the same reason your W-2 reflects the sum of your paychecks for the tax year without factoring in any partial pay-periods in Jan/Dec.
answered yesterday
Hart COHart CO
32.6k57692
answered yesterday
Hart COHart CO
32.6k57692
answered yesterday
Hart COHart CO
32.6k57692
answered yesterday
Hart COHart CO
32.6k57692
32.6k57692
1
You may not be able to claim that ~15 days interest for December of 2018, but next year, you'll be able to recoup that with claiming the whole of the interest on your January 15, 2019 mortgage payment, rather than just claiming the last 15 days of accrual that accrued only in 2019.
– Milwrdfan
yesterday
1
Also, the 1099 issued by your mortgage company will specify how much mortgage interest you paid in the year.
– Xalorous
12 hours ago
add a comment |
1
You may not be able to claim that ~15 days interest for December of 2018, but next year, you'll be able to recoup that with claiming the whole of the interest on your January 15, 2019 mortgage payment, rather than just claiming the last 15 days of accrual that accrued only in 2019.
– Milwrdfan
yesterday
1
Also, the 1099 issued by your mortgage company will specify how much mortgage interest you paid in the year.
– Xalorous
12 hours ago
1
1
You may not be able to claim that ~15 days interest for December of 2018, but next year, you'll be able to recoup that with claiming the whole of the interest on your January 15, 2019 mortgage payment, rather than just claiming the last 15 days of accrual that accrued only in 2019.
– Milwrdfan
yesterday
You may not be able to claim that ~15 days interest for December of 2018, but next year, you'll be able to recoup that with claiming the whole of the interest on your January 15, 2019 mortgage payment, rather than just claiming the last 15 days of accrual that accrued only in 2019.
– Milwrdfan
yesterday
1
1
Also, the 1099 issued by your mortgage company will specify how much mortgage interest you paid in the year.
– Xalorous
12 hours ago
Also, the 1099 issued by your mortgage company will specify how much mortgage interest you paid in the year.
– Xalorous
12 hours ago
add a comment |
If you want to maximize the payment of mortgage interest in a particular year (for example you might be bundling deductible expenses in odd years and taking the standard deduction in even years), it might be useful to make an extra payment on the last business day of the month, or to prepay interest.
If you haven't intentionally done that, accrued interest is not deductible.
answered 8 hours ago
Nathan LNathan L
29.9k1675130
Makes me wonder. If I were to pay ahead, and was careful not to have the payments credited as principal, if a large number of December payments (or a large check of payment X 12) would have prepaid interest all be deductible in that year? This would make a great “grouping” strategy for those who border on the std deduction.
– JoeTaxpayer♦
8 hours ago
1
@JoeTaxpayer I think you can, I wonder how long before that avenue also gets closed, but for now it seems to meet the letter of the law.
– Nathan L
7 hours ago
(tangent from main Q/A, sorry) - I pay my annual ($18K+) health insurance in advance every other year, and use a charitable acct to do the same for donations. Adding mortgage to this would get me an nice every other year large itemized Sch A, and a $24K std deduction, in odd years. That will partially even the game on capped SALT.
– JoeTaxpayer♦
7 hours ago
Yeah, bundling won't work for me, but it works great for my dad. I gave him a loan at the end of the year to double up his deductions and we got him a nice Roth conversion tax free. If he can hang on until he's 90, we can probably get all of his money moved without incurring any extra taxes.
– Nathan L
7 hours ago
add a comment |
If you want to maximize the payment of mortgage interest in a particular year (for example you might be bundling deductible expenses in odd years and taking the standard deduction in even years), it might be useful to make an extra payment on the last business day of the month, or to prepay interest.
If you haven't intentionally done that, accrued interest is not deductible.
answered 8 hours ago
Nathan LNathan L
29.9k1675130
Makes me wonder. If I were to pay ahead, and was careful not to have the payments credited as principal, if a large number of December payments (or a large check of payment X 12) would have prepaid interest all be deductible in that year? This would make a great “grouping” strategy for those who border on the std deduction.
– JoeTaxpayer♦
8 hours ago
1
@JoeTaxpayer I think you can, I wonder how long before that avenue also gets closed, but for now it seems to meet the letter of the law.
– Nathan L
7 hours ago
(tangent from main Q/A, sorry) - I pay my annual ($18K+) health insurance in advance every other year, and use a charitable acct to do the same for donations. Adding mortgage to this would get me an nice every other year large itemized Sch A, and a $24K std deduction, in odd years. That will partially even the game on capped SALT.
– JoeTaxpayer♦
7 hours ago
Yeah, bundling won't work for me, but it works great for my dad. I gave him a loan at the end of the year to double up his deductions and we got him a nice Roth conversion tax free. If he can hang on until he's 90, we can probably get all of his money moved without incurring any extra taxes.
– Nathan L
7 hours ago
add a comment |
If you want to maximize the payment of mortgage interest in a particular year (for example you might be bundling deductible expenses in odd years and taking the standard deduction in even years), it might be useful to make an extra payment on the last business day of the month, or to prepay interest.
If you haven't intentionally done that, accrued interest is not deductible.
answered 8 hours ago
Nathan LNathan L
29.9k1675130
If you want to maximize the payment of mortgage interest in a particular year (for example you might be bundling deductible expenses in odd years and taking the standard deduction in even years), it might be useful to make an extra payment on the last business day of the month, or to prepay interest.
If you haven't intentionally done that, accrued interest is not deductible.
answered 8 hours ago
Nathan LNathan L
29.9k1675130
answered 8 hours ago
Nathan LNathan L
29.9k1675130
answered 8 hours ago
Nathan LNathan L
29.9k1675130
answered 8 hours ago
Nathan LNathan L
29.9k1675130
29.9k1675130
Makes me wonder. If I were to pay ahead, and was careful not to have the payments credited as principal, if a large number of December payments (or a large check of payment X 12) would have prepaid interest all be deductible in that year? This would make a great “grouping” strategy for those who border on the std deduction.
– JoeTaxpayer♦
8 hours ago
1
@JoeTaxpayer I think you can, I wonder how long before that avenue also gets closed, but for now it seems to meet the letter of the law.
– Nathan L
7 hours ago
(tangent from main Q/A, sorry) - I pay my annual ($18K+) health insurance in advance every other year, and use a charitable acct to do the same for donations. Adding mortgage to this would get me an nice every other year large itemized Sch A, and a $24K std deduction, in odd years. That will partially even the game on capped SALT.
– JoeTaxpayer♦
7 hours ago
Yeah, bundling won't work for me, but it works great for my dad. I gave him a loan at the end of the year to double up his deductions and we got him a nice Roth conversion tax free. If he can hang on until he's 90, we can probably get all of his money moved without incurring any extra taxes.
– Nathan L
7 hours ago
add a comment |
Makes me wonder. If I were to pay ahead, and was careful not to have the payments credited as principal, if a large number of December payments (or a large check of payment X 12) would have prepaid interest all be deductible in that year? This would make a great “grouping” strategy for those who border on the std deduction.
– JoeTaxpayer♦
8 hours ago
1
@JoeTaxpayer I think you can, I wonder how long before that avenue also gets closed, but for now it seems to meet the letter of the law.
– Nathan L
7 hours ago
(tangent from main Q/A, sorry) - I pay my annual ($18K+) health insurance in advance every other year, and use a charitable acct to do the same for donations. Adding mortgage to this would get me an nice every other year large itemized Sch A, and a $24K std deduction, in odd years. That will partially even the game on capped SALT.
– JoeTaxpayer♦
7 hours ago
Yeah, bundling won't work for me, but it works great for my dad. I gave him a loan at the end of the year to double up his deductions and we got him a nice Roth conversion tax free. If he can hang on until he's 90, we can probably get all of his money moved without incurring any extra taxes.
– Nathan L
7 hours ago
Makes me wonder. If I were to pay ahead, and was careful not to have the payments credited as principal, if a large number of December payments (or a large check of payment X 12) would have prepaid interest all be deductible in that year? This would make a great “grouping” strategy for those who border on the std deduction.
– JoeTaxpayer♦
8 hours ago
Makes me wonder. If I were to pay ahead, and was careful not to have the payments credited as principal, if a large number of December payments (or a large check of payment X 12) would have prepaid interest all be deductible in that year? This would make a great “grouping” strategy for those who border on the std deduction.
– JoeTaxpayer♦
8 hours ago
1
1
@JoeTaxpayer I think you can, I wonder how long before that avenue also gets closed, but for now it seems to meet the letter of the law.
– Nathan L
7 hours ago
@JoeTaxpayer I think you can, I wonder how long before that avenue also gets closed, but for now it seems to meet the letter of the law.
– Nathan L
7 hours ago
(tangent from main Q/A, sorry) - I pay my annual ($18K+) health insurance in advance every other year, and use a charitable acct to do the same for donations. Adding mortgage to this would get me an nice every other year large itemized Sch A, and a $24K std deduction, in odd years. That will partially even the game on capped SALT.
– JoeTaxpayer♦
7 hours ago
(tangent from main Q/A, sorry) - I pay my annual ($18K+) health insurance in advance every other year, and use a charitable acct to do the same for donations. Adding mortgage to this would get me an nice every other year large itemized Sch A, and a $24K std deduction, in odd years. That will partially even the game on capped SALT.
– JoeTaxpayer♦
7 hours ago
Yeah, bundling won't work for me, but it works great for my dad. I gave him a loan at the end of the year to double up his deductions and we got him a nice Roth conversion tax free. If he can hang on until he's 90, we can probably get all of his money moved without incurring any extra taxes.
– Nathan L
7 hours ago
Yeah, bundling won't work for me, but it works great for my dad. I gave him a loan at the end of the year to double up his deductions and we got him a nice Roth conversion tax free. If he can hang on until he's 90, we can probably get all of his money moved without incurring any extra taxes.
– Nathan L
7 hours ago
add a comment |
morsecoder is a new contributor. Be nice, and check out our Code of Conduct.
morsecoder is a new contributor. Be nice, and check out our Code of Conduct.
morsecoder is a new contributor. Be nice, and check out our Code of Conduct.
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