👉 The Internal Revenue Service (IRS) math, often referred to as the "IRS math trick," is a simple yet effective method for calculating tax deductions, particularly for mortgage interest. It works by subtracting a percentage of your home's mortgage interest from the total amount of interest you've paid over the life of the loan. To apply this, you first need to find the total interest paid on your mortgage over 30 years using the formula: Total Interest = Monthly Payment
Number of Years / 12. Then, multiply this total interest by 0.31 (or 31%) to get your annual mortgage interest deduction. This deduction can significantly reduce your taxable income, but it's crucial to note that the IRS has specific rules and limitations, such as caps on deductions for high-value homes or loans exceeding a certain amount. Always consult IRS guidelines or a tax professional to ensure compliance.
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