Get an extra interest deduction by making your January mortgage payment in early December. The IRS Form 1098 from the lender will show the interest paid in December, including all or part of the accrued interest from your January payment.

Specific Details

The parents reduced their taxable income by $2,000 by paying their mortgage earlier to gain interest deductions. Since the parents income was taxed at the 30% tax bracket, the income reduction may decrease their income taxes by $600 ($2,000 x 30%).

Potential Savings

If you are in a combined (federal, self-employment, and state) tax bracket of 30%, you could reduce your taxes up to $300 for every $1,000 of income reduction by paying your mortgage earlier to gain interest deductions.