Deduction Interest
Running Head: RESEARCH PROBLEM 1
Research Problem 1
ACC 307
February 24, 2010
Deduction interest has been an arguable topic since 1913. The four types of allowed qualified interest are as followed. a) Interest on Qualified Student Loans b) Investment Interest c) Qualified Residence Interest (home mortgage) d) Business Interest
Interest on Qualified Student Loans
Interest on qualified student loan can deduct the interest as a deduction for AGI. This deduction is permitted if the money borrowed was used to finance qualified education expense. In order to deduct the interest on Qualified Student Loan the money must have been paid qualified education expense. The maximum deduction is $2,500 and is phased out for taxpayers with modified AGI in excess of …show more content…
And what are the categories under Qualified Residence Interest? Qualified residence interest is interest paid or accrued on indebtedness (subject to limitations) secured by a qualified residence of the taxpayer. (Willis, Maloney, Raabe, & Young, 2010) pg10-15. The two categoriez under Qalified Residence Interest are interest on acquisition indebtedness and interest on home equity loans. The qualified residence is the principal residence of tax payer and one additional residence of tax payer or spouse. Qualified interest is completely deductible. However, Interested paid or accrued in the same tax year on aggregate acquisition indebtedness of $1 million or less ($500,000 for married persons filling separate returns). Home equity loan is like when tax a payer takes out personal loan as second mortgage using their home as a security. Since a home equity loan can be used for any personal use for which in that situation the interest would not be deductable the only way the interest is deductible is if the least of the residence fair market value, less the acquisition indebtedness or $100,00 ($50,000 for married filling persons filling separate
Research Problem 1
ACC 307
February 24, 2010
Deduction interest has been an arguable topic since 1913. The four types of allowed qualified interest are as followed. a) Interest on Qualified Student Loans b) Investment Interest c) Qualified Residence Interest (home mortgage) d) Business Interest
Interest on Qualified Student Loans
Interest on qualified student loan can deduct the interest as a deduction for AGI. This deduction is permitted if the money borrowed was used to finance qualified education expense. In order to deduct the interest on Qualified Student Loan the money must have been paid qualified education expense. The maximum deduction is $2,500 and is phased out for taxpayers with modified AGI in excess of …show more content…
And what are the categories under Qualified Residence Interest? Qualified residence interest is interest paid or accrued on indebtedness (subject to limitations) secured by a qualified residence of the taxpayer. (Willis, Maloney, Raabe, & Young, 2010) pg10-15. The two categoriez under Qalified Residence Interest are interest on acquisition indebtedness and interest on home equity loans. The qualified residence is the principal residence of tax payer and one additional residence of tax payer or spouse. Qualified interest is completely deductible. However, Interested paid or accrued in the same tax year on aggregate acquisition indebtedness of $1 million or less ($500,000 for married persons filling separate returns). Home equity loan is like when tax a payer takes out personal loan as second mortgage using their home as a security. Since a home equity loan can be used for any personal use for which in that situation the interest would not be deductable the only way the interest is deductible is if the least of the residence fair market value, less the acquisition indebtedness or $100,00 ($50,000 for married filling persons filling separate