Real Estate Tax Odd Situation
Tony Sivori
the taxing agencies rules. I was supposed to get a notice in April, and
the opportunity to appeal the increase. I received no such notice.
To my substantial surprise, the Property Valuation Administration not only
admitted their mistake, they also corrected it.
Unfortunately, it was too late for my escrow account. The incorrect higher
amount was paid to the tax agency. The tax agency in turn issued a refund
check to me (not to my escrow account) for the difference.
Obviously, even though the statement from my mortgage company shows the
incorrect higher tax paid, I should only take the deduction for the
smaller, corrected tax amount.
My question is, will the refund check from the tax agency be taxable
income?
--
Tony Sivori
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removep...@yahoo.com
> The property tax on my residence was raised in manner inconsistent with
> the taxing agencies rules. I was supposed to get a notice in April, and
> the opportunity to appeal the increase. I received no such notice.
>
> To my substantial surprise, the Property Valuation Administration not only
> admitted their mistake, they also corrected it.
>
> Unfortunately, it was too late for my escrow account. The incorrect higher
> amount was paid to the tax agency. The tax agency in turn issued a refund
> check to me (not to my escrow account) for the difference.
>
> Obviously, even though the statement from my mortgage company shows the
> incorrect higher tax paid, I should only take the deduction for the
> smaller, corrected tax amount.
>
> My question is, will the refund check from the tax agency be taxable
> income?
Was the higher property tax paid, and refund received in the same
year? If yes, then the refund is not taxable income. Just deduct the
lower amount.
Barry Margolin
<f922fac4-05e4-44da...@l30g2000yqb.googlegroups.com>,
"removep...@yahoo.com" <removep...@yahoo.com> wrote:
> On Jan 1, 7:55�am, Tony Sivori <TonySiv...@yahoo.com> wrote:
> > My question is, will the refund check from the tax agency be taxable
> > income?
>
> Was the higher property tax paid, and refund received in the same
> year? If yes, then the refund is not taxable income. Just deduct the
> lower amount.
Doesn't it come out the same either way? Either you have additional
income offset by the higher deduction, or you have a lower deduction.
Unless you aren't able to itemize deductions. But most people who own a
home have enough mortgage interest and property tax that they can
itemize.
--
Barry Margolin, bar...@alum.mit.edu
Arlington, MA
*** PLEASE don't copy me on replies, I'll read them in the group ***
Tony Sivori
"removep...@yahoo.com" <removep...@yahoo.com> wrote:
> Tony Sivori wrote:
>> My question is, will the refund check from the tax agency be taxable
>> income?
>
> Was the higher property tax paid, and refund received in the same year?
> If yes, then the refund is not taxable income. Just deduct the lower
> amount.
Yes, fortunately for me I cashed the check last week for taxes that were
paid at the end of November.
--
Tony Sivori
Due to spam, I'm filtering all Google Groups posters.
removep...@yahoo.com
> �"removeps-gro...@yahoo.com" <removeps-gro...@yahoo.com> wrote:
> > On Jan 1, 7:55�am, Tony Sivori <TonySiv...@yahoo.com> wrote:
> > > My question is, will the refund check from the tax agency be taxable
> > > income?
>
> > Was the higher property tax paid, and refund received in the same
> > year? �If yes, then the refund is not taxable income. �Just deduct the
> > lower amount.
>
> Doesn't it come out the same either way? �Either you have additional
> income offset by the higher deduction, or you have a lower deduction.
>
> Unless you aren't able to itemize deductions. �But most people who own a
> home have enough mortgage interest and property tax that they can
> itemize.
Note that if you're in AMT then you don't get a tax break for your
property tax deduction, so the refund is not taxable.
removep...@yahoo.com
> > On Jan 1, 7:55�am, Tony Sivori <TonySiv...@yahoo.com> wrote:
> > > My question is, will the refund check from the tax agency be taxable
> > > income?
>
> > Was the higher property tax paid, and refund received in the same
> > year? �If yes, then the refund is not taxable income. �Just deduct the
> > lower amount.
>
> Doesn't it come out the same either way? �Either you have additional
> income offset by the higher deduction, or you have a lower deduction.
>
> Unless you aren't able to itemize deductions. �But most people who own a
> home have enough mortgage interest and property tax that they can
> itemize.
So I see. We could do the tax return two ways.
(1) Take the higher deduction on Schedule A and additional income on
form 1040 (but if an AMT then the additional income is 0).
(2) Just take the lower deduction on Schedule A.
If both methods result in the same tax, then use method (1) as you're
guaranteed the IRS won't contact you. If method (1) results in higher
tax, say because you take the standard deduction only, then use method
method (2), and respond to the IRS should they inquire. Does this
strategy sound OK?