Happy tax return Tuesday! Today's must know tax return tip for family lawyers is Schedule A.
Schedule A contains itemized deductions which reduce taxable income. Married taxpayers will only choose to itemize if their deductions exceed the standard deduction ($25,900 in 2022).
If the parties own their residence, real estate taxes and mortgage interest are typically reported as an itemized deduction. Due to limitations on the amount that can be deducted, mortgage interest and property taxes may not reflect the full cost to the parties due to a $10,000 cap on state and local income tax, plus a cap on the mortgage interest deduction of $750k in mortgage principal.
When relevant, you may want to make requests for mortgage documents if you see an interest deduction, including any appraisals, the initial application and any documents that were used to justify the financial status of the parties at the time of loan issuance.
Schedule A may also include information on medical expenses, unreimbursed job expenses, casualty losses and charitable contributions, which may be relevant in certain instances.
Remember, a review of Schedule A is only relevant to the extent the total itemized deductions exceed ~$26k for the year. What else you got? Let me know in the comments 👇
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