HSA, 401k, IRA, Mortgage Interest: Standard Deduction or Itemizing?

[tll1975]

I'm cheap and blessed. Here is my situation:

Mortgage Interest is only $2770/yr (good credit & simple needs=cheap mortgage :)

Is there any way I can deduct this from my taxes? Its the only deduction i have. I'm not married nor do i have kids. I have no other debts either. I decided to switch from a maxing out my Roth to a Traditional and also max out my HSA. I also contribute up to what my employer matches with my 401k. The trad IRA, HSA, and 401k only effect my AGI, they're not 'deductions.' So i still end up taking the standard deduction instead of itemizing each year. I feel like i'm losing out by not being able to itemize and deduct my mort interest.

Any suggestions or am I not understanding all this correctly?

[SimpleCycle]

Why do you feel like you're losing out?  You get a bigger deduction from the standard deduction than you would from just the mortgage interest.

However, look at all your itemized deductions.  Property, state, and local income taxes are deductible.  Some medical expenses are deductible.  Charitable contributions are deductible.  If those add up to more than the standard deduction, then itemize.

[boarder42]

mortgage interest/ student loan interest/ state income tax/ tax prep fees from previous year/ donations/ Property tax all count towards deductions.  if thats more yay if not standard is all you got.

[SimpleCycle]

mortgage interest/ student loan interest/ state income tax/ tax prep fees from previous year/ donations/ Property tax all count towards deductions.  if thats more yay if not standard is all you got.

Student loan interest is "above the line" and can be deducted whether you itemize or not.

[ltt]

It has been harder every year to itemize.  We don't have mortgage interest, so that leaves us property taxes, state income tax, some medical bills if the bills exceeds more than 10% of our adjusted gross income--which they never do, and contributions.  We just take the standard deduction

[bugbaby]

Why don't you max the 401k to 18k?

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[tonysemail]

hi, welcome to the forums :)

the generic advice is to bunch itemized deductions and alternate every year between standard deduction and itemized deductions.
for example, double up charity or property taxes on odd years and nothing on even years.
http://forum.mrmoneymustache.com/ask-a-mustachian/standard-deduction-games/

[tll1975]

thanks everyone. looks like its standard for me. my prop taxes are less than $1000, no std loans, and state inc taxes are also less $1000.

babybug mentioned maxing out my 401k. my only concern with that is the fees associated with 401k's. didn't the guy who invented 401k's say its the biggest regret of his life? haha

[MDM]

thanks everyone. looks like its standard for me. my prop taxes are less than $1000, no std loans, and state inc taxes are also less $1000.

You could make $6300 in charitable contributions and then all the mortgage interest, prop and state taxes would be deductible. ;)

babybug mentioned maxing out my 401k. my only concern with that is the fees associated with 401k's. didn't the guy who invented 401k's say its the biggest regret of his life? haha

Biggest regret because...companies used the 401k as an excuse to get rid of defined benefit pensions and then people didn't contribute enough to 401ks.

See https://www.bogleheads.org/wiki/401(k)#Expensive_or_mediocre_choices to see if your fees are as bad as you think, or not.

[bugbaby]

thanks everyone. looks like its standard for me. my prop taxes are less than $1000, no std loans, and state inc taxes are also less $1000.

babybug mentioned maxing out my 401k. my only concern with that is the fees associated with 401k's. didn't the guy who invented 401k's say its the biggest regret of his life? haha

401k is the best tax deduction and retirement savings for anyone with a high marginal tax rate.  The fees vary wildly among plans, but the worst is probably 1.5%, a lot less than the say, 25% tax you save, not to mention the market return. But even poor plans often have a couple reasonably priced index funds. Then if you leave that employer you can move to an IRA with great options such as Vanguard.

The reason for regret of 401k is that it replaced pensions...but that ship sailed loooong ago.

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