Schedule A - Interest You Paid

Interest paid by a taxpayer for a legally liable debt is deductible: 

Where to Deduct Interest Expenses Paid

Qualified Home Mortgage Interest 

The amount of home mortgage interest that can be deducted for the tax years from 2018 to 2025 depends on the amount and date of the mortgage, as well as the manner in which the taxpayer uses the proceeds. A qualified home can either be the main or second home of the taxpayer. 

• Mortgages taken out on or before october 13, 1987 - No limits are present. Regardless of the manner in which the loan is used, interest is fully deductible. 
• Mortgages acquired after October 13, 1987 and before December 15, 2017 - The consolidated acquisition debt on the main and second home of the taxpayer is limited to $1,000,000 (For MFS filing status it is $500,000). Interest paid may only be deducted if the proceeds were used in the buying, building or significant improvement of the main or second home of the taxpayer. 
• Mortgages acquired after December 15, 2017 - the consolidated acquisition debt on the main and second home of the taxpayer is limited to $750,000 (For MFS fi;ling status it is $375,000). Interest paid may only be deducted if the proceeds were used in the buying, building or significant improvement of the main or second home of the taxpayer. 

Home equity debt acquired after December 15, 2017 - for home equity interest to be deducted, the proceeds of the loan must have been used in the buying, building or improvement of the home.

Investment Interest 

Investment interest expense is deducted to the extent of the net investment income of the taxpayer. The unallowed amount that results from the deduction limit can be forwarded to the successive year. The phrase “margin interest” on the brokerage statement is investment interest. 

Fill Form 4952 to compute the deductible amount of investment interest expense in the present year and the carryforward, in case there is any. The following must apply for Form 4952 to apply: 

• Investment interest expense is not more than investment income from interest as well as ordinary dividends less the qualified dividends 
• There aren’t any other deductible investment expenses, for instance, depreciation, depletion and any Form 1099-INT or 1099-OID expense. 
• The taxpayer lacks any carryforward of investment interest expense that was disallowed from the previous year. 

In The Taxx Savage Pro, if Form 4952 is not required, you can enter investment interest in Schedule A when you: 

• Go to the Main Menu of the tax return (Form 1040) 
• From the menu, select Itemized Deductions 
• Then Interest You Paid 
• Proceed to Investment Interest - Click Ok, then enter the amount 

Additional Information:

IRS: Instructions for Schedule A

IRS: Form 4952 and Instructions