Intuit Academy Tax Practice Exam

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Study for the Intuit Academy Tax Exam. Prepare with interactive quizzes, flashcards, and detailed explanations for each question. Enhance your tax knowledge and ace your exam confidently.

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Is a $5,000 mortgage deduction of a $350,000 mortgage possible under current tax rules assuming itemizing deductions?

Yes, it is possible
No, it is not possible
Yes, but only under certain conditions
No, it requires more documentation

The correct answer is: Yes, it is possible

Under current tax rules, it is indeed possible to deduct mortgage interest on a mortgage that amounts to $350,000, provided that the taxpayer is itemizing their deductions. The Tax Cuts and Jobs Act, which took effect in 2018, allows taxpayers to deduct interest on home mortgage debt up to $750,000 for mortgages taken out after December 15, 2017. Since a $350,000 mortgage falls well below this limit, the homeowner is eligible to deduct the mortgage interest. The potential deduction amount, such as $5,000, would depend on the interest paid during the tax year and the specifics of the mortgage agreement. As long as the interest component of the mortgage payments totals that deduction amount, it can be claimed when itemizing deductions on Schedule A of the tax return. While it’s important to have accurate documentation and follow IRS guidelines when claiming deductions, the option available does not require conditions that would disallow the deduction based on the mortgage amount alone. Therefore, within the frameworks of regulations and proper reporting, obtaining a $5,000 mortgage deduction is feasible under the current tax rules for a mortgage of this size.