question.jpgIn Federal Income Tax

How do I claim and report deductible interest expenses?

With the exception of student loan interest, if you are going to claim interest expenses on your federal income tax returns you have to itemize your deductions and use Form 1040 (so you cannot use Form 1040A or Form 1040EZ). This means you will have to use Schedule A. In addition, there are certain other forms you have to use depending on what type of interest expense you are claiming:

For home mortgage interest and points, you only need to use Schedule A.

For investment income, you have to first use Form 4952, and that information is then carried over to Schedule A.

For interest on loans used for business purposes, you have to use Schedule C.

For interest on loans related to rental property, you have to use Schedule E.