tax return & property taxes

[feh]

Hi folks.

Quick question - when it comes to deducting property taxes on your tax return, is the year of the taxes the pertinent date, or the date on which they were paid?

I ask, because I'd like to "bunch" some deductions, and I'm wondering if that's possible with property taxes or not.

Thanks!

[savingmama]

It is from the year it was paid. I know for sure because of the 1098 that was sent by my mortgage company.

[texastek76]

I know several people who pay their previous years taxes in January then pay the current year that same December. That way they get to deduct both years taxes on one return. It is cyclical and you get no benefit every other year so I don't get it but some think it is the way to go.

[feh]

Originally Posted by texastek76

I know several people who pay their previous years taxes in January then pay the current year that same December. That way they get to deduct both years taxes on one return. It is cyclical and you get no benefit every other year so I don't get it but some think it is the way to go.

Rockin' good news.

It would make sense for me and my wife. We have to take the standard deduction now (ever since we paid off our house). If I'm able to bunch up the property taxes, we'd at least be able to itemize every other year.

[cptacek]

Originally Posted by texastek76

I know several people who pay their previous years taxes in January then pay the current year that same December. That way they get to deduct both years taxes on one return. It is cyclical and you get no benefit every other year so I don't get it but some think it is the way to go.

It is because their deductions with only one years taxes is very close to the standard deduction. So, one year, they get the standard deduction, and the next year, because they paid two years of taxes in that year, they get a higher deduction.

For example, say the standard deduction is $5000 (it's not, but play along)and your property taxes for one year is $4000 and the rest of what you can deduct is $1000. One year, you use the $5000 standard deduction, and the next year you pay $4000 in January (for the previous year) and $4000 in December (for the current year), plus $1000 of other deductions (for the current year), so you can use $9000 instead of $5000.

So every other year, you have $9000 in deductions instead of $5000.

[texastek76]

Originally Posted by cptacek

It is because their deductions with only one years taxes is very close to the standard deduction. So, one year, they get the standard deduction, and the next year, because they paid two years of taxes in that year, they get a higher deduction.

For example, say the standard deduction is $5000 (it's not, but play along)and your property taxes for one year is $4000 and the rest of what you can deduct is $1000. One year, you use the $5000 standard deduction, and the next year you pay $4000 in January (for the previous year) and $4000 in December (for the current year), plus $1000 of other deductions (for the current year), so you can use $9000 instead of $5000.

So every other year, you have $9000 in deductions instead of $5000.

Good point. In your example you get to deduct $14000 over two years instead of $10000. I will have to press one specific friend on this issue as he is no where near the standard deduction (well over).

[scfr]

Check with your taxing authority (probably your county) before making an early payment. The county where I used to live did not allow it. I wanted to pre-pay my property tax for the following year to take the tax deduction, but my county said that if I sent a check, they would just return it to me.