Bought a house last year and i did not see any changes to my tax returns after going through the turbo tax steps. am i missing a step? i was told i would get more

HOMEOWNERSHIP DEDUCTIONS

It is very hard for a lot of people to use itemized deductions now that the standard deduction is so much higher.  Your home ownership may not have any effect on your tax due or refund, especially if you purchased the house late in the year.  

Standard Deduction
Your itemized deductions have to be more than your standard deduction before you will see a change in your tax owed or tax refund.  The deductions you enter do not necessarily count “dollar for dollar;” many of them are subject to meeting  tough thresholds—medical expenses, for example, must meet a threshold that is pretty hard to reach.  The software program uses all the IRS rules that apply to the expenses you enter, and it tells you if you have enough to use your itemized deductions or if using the standard deduction is more advantageous for you.  Under the new tax laws, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes. 

2020 Standard Deduction Amounts

Single $12,400   (+ $1650 65 or older)

Married Filing Separate  $12,400   (+ $1300 if 65 or older)

Married Filing Jointly $24,800   (+ $1300 for each spouse 65 or older)

Head of Household $18,650  (+ $1650 for 65 or older)

Home Ownership

There is not a first time home buyers credit on a Federal return. That ended in 2010. If your state has such as credit, you will be able to enter it when you prepare your state return.

Buying a home is not a guarantee of a big refund.  Your deductions for homeownership combined with your other deductions (if any) must exceed your standard deduction to change your tax due or refund. If you purchased your home late in the year, you do not even have a full year of home

ownership deductions.

Your closing costs on your new home are not deductible except for prepaid interest, prepaid property tax or loan origination fees.  There are no deductions for appraisal, inspections, title searches, settlement fees. etc.

Your down payment is not deductible.

Your homeowners insurance for fire, hazard, flood, etc. is not deductible for your own home.

Home improvements, repairs, maintenance, etc. for your own home are not deductible. 

Homeowners Association  (HOA) fees for your own home are not deductible.

Go to Federal> Deductions and Credits> Your Home to enter mortgage interest, property taxes, private mortgage insurance (PMI) and loan origination fees (“points”) that you paid in 2020.  You should have a 1098 from your mortgage lender that shows this information.  Lenders send these in January/early February.

The purchase of a home is not reported on a tax return.  Repairs to a personal residence are not reported on a tax return.  Improvement costs to a personal residence, not used as a rental or in a business, are not reported on a tax return.  The improvement costs are added to the basis of the home when it is sold.

You can only enter the mortgage interest paid, mortgage insurance paid (if applicable), points paid on the new loan and property taxes paid as itemized deductions on Schedule A.  

The total of all your itemized deductions on Schedule A must be greater than the standard deduction for your filing status to have any tax benefit.

Standard deductions for 2020

• Single - $12,400 add $1,650 if age 65 or older
• Married Filing Separately - $12,400 add $1,300 if age 65 or older
• Married Filing Jointly - $24,800 add $1,300 for each spouse age 65 or older
• Head of Household - $18,650 add $1,650 if age 65 or older