Post # 1
When SO did his taxes for 2017 the tax preparer said PMI was no longer tax deductible so the $800 in PMI payments was not included, but fast forward to now the deduction was reinstated but the tax preparer said it didn’t really make a difference in his payment/refund (he paid state $280, and was refunded from fed $800). I’m debating whether I should just let it go, like is adding the $800 in PMI not enough to make a difference and worth the hassle, or is the tax preparer wrong or just saying that to get out of doing extra paperwork?
By the way I tried using the free online tax refund calculators so I could see the difference between adding or not the $800, but I did not find any calculator that had the option to add PMI paymentts.
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Post # 2
It depends on his income if it’s worth it. The PMI deduction helps lower income earners. A google search says that its phased out if your AGI is over $109,001 (or $54,501 if married filing separately). DH and I have never qualified for the PMI deduction so I can’t say it would be worth it for us to do extra paperwork and possibly pay more money to the tax preparer, but it could help, I guess.
Post # 3
I’m legally single and own my own home and the PMI deduction definitely helped. Every bit that gets you above the standard deduction is money right back in your pocket. Maybe you make too much money for it to help? I’d try running it on Turbo Tax or something to see.
Post # 4
We were not married in 2017 so he filed single & made under just $60k
I guess it’s just confusing to me as how that amount wouldn’t make any difference at all, I don’t know if there’s a special conversion or if only certain percentage of it is counted, because from what I read online he qualifies for the deduction since his income is less than $100k & he was unmarried for 2017 so filed single. I ran different free online calculators for tax returns but none of them had the PMI option so I couldn’t see the difference of with or without it.
Post # 5
did his tax guy use the standard deduction? If you don’t have enough individual deductions (PMI, student loan interest, charitable donations, IRA contribution, etc) to add up to more than the standard deduction, then none of those line item individual deductions really matter because you just go with the standard deduction. That’s my understanding at least – I just started doing my own taxes a few years ago at age 33 lol. Last year I did the standard deduction, this year I realized that all my individual deductions added up to more than the standard deduction so I did that.
Post # 6
If you qualify for the deduction, I usually estmiate a savings of about 25-30% for deductions. $800 deduction is basically saying you made $800 less, so you pay taxes on $800 less of your income. So whatever top bracket of your tax rate * $800 would be your savings.
Post # 7
He did the itemized deduction because it did add up to be more than the standard deduction.
Thanks that makes sense. I’ll have to give the guy a call to see what we can do now
Post # 8
I can’t imagine it would have no effect at all, but it may not be worth the trouble, especially if you have to pay your tax guy another fee.
A quick google search showed that TurboTax added PMI to the mortgage interest deduction section on 2/22. Did you try them after that?
ETA: If it is worth it, but your tax guy wants to charge another fee, it’s not that difficult to amend your return yourself on paper for free… I did it last year when I forgot to tell our tax guy about a credit we were supposed to get.
Post # 9
I kind of feel like he shouldn’t charge us extra, but I’m waiting on a call back from him. Because we did taxes with him on March 14th, and that was after the PMI deduction was added back, but I guess he was not updated on that, and we were unaware as well.
Maybe they added it to the downloadable program itself, I was only using the free calculator feature on their website.
Post # 10
I mean it is just a deduction from income. But I don’t care if its a dollar or $800…. takes 5 seconds to include the deduction towards your taxes… Ridiculous to charge you. But I guess it is technically a corrected refund! Not sure.
Post # 11
he should absolutely not charge you and he should fix it. HE is the tax professional and he gave you incorrect advice. That is an extra $800 you shouldn’t pay taxes on, and in the 25% bracket means an extra $200 in your pocket. He’s being lazy.
Post # 12
If he’s not over the income limit and he qualifies for itimized deductions then he can claim it.
If the tax preparer made the initial mistake then they should correct their own mistake without charging you!
Post # 13
Didnt even know the PMI deduction had come back! Thanks for the heads up!
Post # 14
As someone who does taxes for a living, although not individuals, this fix and an amendment will take him 15 minutes tops. He should definitley not charge you. As a tax practitioner it is his job to stay up to date on current laws, deductions and credits you qualify for, etc. If he failed to do that, he is responsible and can easily ammend! I would expect and additional $200 refund for federal.