1

This is related to USA and California tax: in 2012, I can deduct $40,000 of mortgage interest for personal income tax, and the same for 2013. However, since I worked only for 2 months in 2012, and the wages of $25,000 is less than the $40,000, so the deduction kind of "go into waste" because it only helps out to reduce for the wages of $25,000. For 2013, if the wages was $150,000, then can I only apply the $40,000 for 2013? Are there ways to make the 2012 mortgage interest apply partly towards 2013? Or any other ways?

(And what if the mortgage company or if the loan is a private loan, and the lender agrees that some arrangements can be made, such as paying 4 months of the 2012 mortgage payments in January 2013 instead? But if I didn't do it, I guess there is nothing I could do after the fact.)

1

No, you cannot shift deductions between years. You pay taxes on income in the year you earned it, and you take deductions for expenses in the year you paid them.

And what if the mortgage company or if the loan is a private loan, and the lender agrees that some arrangements can be made, such as paying 4 months of the 2012 mortgage payments in January 2013 instead

That would be considered as if you've paid the money in 2012, based on the constructive receipt doctrine. Claiming otherwise might even amount to tax fraud and conspiracy charges against both you and the lender. No lender (with proper legal counsel) would agree to that.

|improve this answer|||||
  • interesting... but is it true that when some person or company pays you for the work you do (or, similarly, when paying you for lottery winning), pay you all in 1 year or pay you partly in 2013 and partly in 2014, or even spread it over a few years? In those cases, are they legal? Or I thought earlier that reporting tax is based on "cash basis"? meaning that if in December, I forgot to pay the $4000 property tax, and I pay it in January next year, then the property tax can count towards deduction for the next year? – nonopolarity Apr 2 '15 at 8:50
  • @動靜能量 that depends on the contract. For lottery winnings you can chose whether to take a lump sum or spread over 20 (I think) years in equal payments, but once you made your choice - you cannot change it anymore, and you cannot divide unequally. For work, depending on your contract, you're usually paid periodically for the work performed in that period, and in most places the period cannot be more than a month (usually a couple of weeks in the US). With mortgage - there's no real business sense for the lender to "help" you, and as such doing that would count as conspiracy to perform tax fraud. – littleadv Apr 2 '15 at 8:55
  • @動靜能量 in case of the property tax, if you "forget" to pay it, you'll get hit with penalties, and depending on the county - you may end up with foreclosure. Usually, the same goes for 4 months delinquency in mortgage. You cannot deduct penalties. – littleadv Apr 2 '15 at 8:57
  • so if I work from June 2014 to Jan 2015, and the company pays me once in Sept 2014 for $20,000 and another $20,000 in Jan 2015, it wouldn't be too acceptable? The second $20,000 can't count as income in 2015? – nonopolarity Apr 2 '15 at 8:57
  • 1
    @動靜能量 if you're a contractor you can structure your contract in some other way, but I'd suggest having a lawyer draft it to ensure your assets are covered. – littleadv Apr 2 '15 at 9:04

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.