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Property Tax Bill Too High? Here’s How to Appeal

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Many homeowners have seen the value of their homes rise dramatically over recent years. As a result, property taxes are generally trending upward too. You can’t always avoid a tax increase based on the higher value. However, if your new property tax bill is unreasonable in comparison to appreciation in your region, you might have grounds for an appeal. If your appeal is justified and determined to be sound, your property tax bill may go down. If you believe your property tax bill is too high, here’s what you need to know about appealing.

When You Can Appeal Your Property Tax Bill

Once you receive your new property tax bill, you only have a limited amount of time to appeal. Exactly how much time you get depends on your jurisdiction, so it can vary from one state or county to the next.

In most cases, you have 90 days to appeal after you receive the new assessment. However, some locations only give you 30 days, so it is best to act quickly.

If the appeals window closes, you will have to pay the amount on your property tax bill. Failing to do so comes with consequences. First, you’ll have penalties and fines for missing your payment. The government can also put a tax lien on your home. In the worst-case scenario, a tax lien can lead to a foreclosure.

Thoroughly Read Your Assessment Letter

Before you initiate an appeal, read your property tax bill carefully. Make sure the details about your property are accurate and take a look at the value assigned to your home and land. If there is an error in the property description, such as an incorrect lot size, the wrong number of bedrooms, or similar error, then that could lead to a high bill that is fairly easy to appeal.

Then, if you don’t spot a blatant error, look over the calculations that determined your property tax bill. How a jurisdiction assigns value for tax assessments differs from determining fair market value for home sales. In most cases, the math itself will be sound. However, it is always wise to learn how the numbers are calculated before you appeal.

Get the Lowdown on Neighboring Properties

You never want to appeal your property tax bill without having a reasonable case showing that it is too high. While appealing without just-cause won’t necessarily lead to a penalty, it does mean you could waste valuable time on a fruitless venture.

Often, the easiest way to make sure you have a decent case is to explore comparable nearby properties, or “comps,” as realtors call them. Research your neighborhood and identify nearby homes. Look for houses with similar features to yours, including the overall size, style, condition, and the number of rooms. Additionally, make sure you compare lot sizes as well, as differences in the amount of land can lead to dramatically different tax assessments.

Once you find a few comps, you need to look up the tax assessments on those properties. Usually, local governments maintain publicly accessible databases, making the information relatively easy to track down. Head to your local Tax Assessor’s Office or Land Records Office website to see if the database is available. If not, you may need to speak with a real estate agent or those neighbors to see if they will share the details.

If you discover that your property tax bill is higher than the comps, you may have a good case. However, even if theirs are similar, if you can demonstrate that those properties are better than yours, you may also be able to get your tax bill lowered.

Present Your Case to the Local Assessor

Once you have built your case, you’ll need to contact your local assessor. Usually, your property tax bill will have instructions on how to proceed with an appeal. However, if you need additional guidance, contact the assessor’s office to discuss the next steps.

Most appeals processes are incredibly formal. You need to follow them precisely if you want your appeal to move forward. Typically, you’ll need to complete a form and submit your evidence. Once complete, the review period can take several months. When they have rendered a decision, you’ll usually receive notification in writing.

Appealing the Decision

If the initial appeal didn’t go your way, you could opt to appeal that review. Usually, you’ll have to pay a small filing fee and submit a request to the appeals board. Then, you can challenge the decision and hope for a better outcome.

Appealing the review can be a lengthy process, especially in larger jurisdictions. In some cases, it may take a year to get a decision.

Risks of Appealing Your Property Tax Bill

Appealing your tax bill can come with risks. While the chance is fairly small, the assessor or appeals board could determine that your property assessment was too low, leaving you with an even higher tax bill.

At times, even if your bill is lowered, the amount is so small that it may not be worth the effort. Similarly, if the change is slight, you may come out financially behind if you paid more than your bill was lowered when you filed for an appeal.

Finally, if you intend to sell your home soon, a drop in the assessed value of your home could hurt you. You may get stuck with a lower sales price since the assessor or board reduced the value.

Have you ever had to appeal your property tax bill? Share your experience in the comments below.

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Guide to Charitable Deductions Under New Tax Laws

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There are so many great reasons to give to charity. Being passionate about a cause motivates many people to give. However, the fact that you can get charitable deductions has always helped a bit. You get to benefit on your taxes when you give to others, provided you follow certain rules in your giving.

However, the tax laws have changed. As a result, fewer people are itemizing their deductions. If you don’t itemize, then you don’t take your charitable deductions into account at all on your taxes. Should you still keep giving to charity? If you do, can you benefit on your taxes at all now? Find the answers below.

Why Do You Give to Charity?

Before we get into the nitty-gritty of how the new tax laws affect charitable deductions, let’s take a moment to consider why we give to charity in the first place. If you’ve gotten so wrapped up in the tax benefits, then you’re really missing the point.

Of course, yes, those tax benefits are nice. However, they’re the icing on the cake. If I’m having trouble deciding between two different places to give my money, then I might choose the one that has non-profit status and therefore allows me to take charitable deductions. However, if I am passionate about a particular cause, I’ll give to it whether I get a tax break from it or not.

Common Reasons People Give to Charity

So, first things first, consider your priorities. People give to charity for all different types of reasons. Common reasons people cite include to:

  • Gain a sense of empowerment over sometimes seemingly-hopeless issues
  • Give back to an organization that has helped them in times of need
  • Help after a particular story moves them
  • Participate in a community as part of their spiritual beliefs
  • Provide help to people who need it because it’s the compassionate thing to do; a sense of duty
  • Reduce guilt over a particular situation
  • Support a cause the individual really believes in
  • Support something a loved one says is important to them
  • Teach children how to help others

Additionally, it feels good to give to others when you have the resources to do so. Undoubtedly, sometimes egoism is also at play; people give because they want others to see them giving.

It’s helpful to know what motivates you. Think about it and put that at the forefront of your mind when it comes to donating in the year to come.

Tax Reform Has Increased Standard Deduction

When it comes to charitable donations, people give in part because they get back. Specifically, they get a break on their taxes. However, you have to take itemized deductions in order to benefit from charitable deductions.

Changes in tax law radically altered the standard deduction. The new reforms started with 2018 tax filing and will continue through 2025. With the new rules, the standard deduction has increased dramatically. Individuals can take a $12,000 standard deduction. Couples who are married and filing jointly can deduct $24,000.

One report indicates that this has had a dramatic impact on the number of people bothering to take itemized deductions. Tax Foundation reports that among people earning between $10,000 and $200,000, standard deductions will decrease by between 63% and 70%. In other words, the majority of taxpayers will not itemize deductions, at least not for the next eight years.

Two Aspects of Tax Reform Encourage Charitable Deductions

There’s something really important to remember here. You do not have to take the standard deduction. You can still opt to itemize deductions. Although many people are opting to take the standard deduction, you can still review both options and choose the one that makes the most sense for you.

If you are passionate about charitable giving, then you might find that it’s actually best to continue to take the standard deductions. If you do, then you can still get the charitable deductions that you’re used to from the past. In fact, two huge changes within the new tax reform rules actually provide an incentive to continue donating to charity.

You Can Now Deduct More for Charitable Giving

First off, you can actually now deduct more for charitable donations than you could in the past. Prior to the tax reform, you could donate in cash up to 50% of your adjusted gross income. If you donated more than that in cash contributions, then it didn’t count toward your deduction.

However, the new rules bump that up another 10%. So, you can now deduct up to 60% of your adjusted gross income if you give that in cash contributions. Be sure to check the exact rules as they apply to your situation. There are certain regulations and limitations on this new part of the law.

You Can Now Itemize More Deductions

If you do decide to itemize your deductions, you’re not going to be capped in the way that you were in the past. Prior to the tax reform, there was a limit on your total itemized deductions. However, until the end of 2025, that limit has been lifted. You can take as much as you’re legally allowed as far as deductions go.

As for charitable giving, this means that whatever you give, you can deduct. In the past, you might have realized that you were capped out and chosen not to give anything more to charity until the next year. However, if you have the funds, you can donate them, because you’re now allowed to count them all towards your itemized deductions.

Should You Give to Charity Despite Changes in Tax Law?

If tax deductions are a primary motivator for giving to charity, then you have to weigh the pros and cons of donating under the new law. People who can give a lot then take itemized deductions will see the tax benefits that they’re seeking.

If you’re like most people, though, the tax benefits are only one reason that you give to charity. If you look at all of the other good reasons to give to others, then you might determine that it’s worth donating even if you do end up taking the standard tax deduction next year.

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What You Should Do Now to Prepare for Next Year’s Income Tax Return

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Many people were concerned that changes to the tax laws meant that they would get a lower tax refund than in years past. Luckily, most people found that not to be true. The 2019 average tax refund was comparable to past years for most people. That said, not everyone was happy with their refund.

So what should you do if your refund was smaller than you expected? Even if you got the same amount back this year as last year, it might be nice to get back more next year, right? Here are some things that you can start doing today to prepare for the maximum refund on your income tax return next year.

Update Your Form W4

If you work a regular job (meaning that you aren’t self-employed or trying to work “under the table”), then you have to fill out a Form w4. Most people don’t think twice about this piece of paper. They fill it out when they first get a job. They hand it to their new boss or HR department along with many other new hire forms. It goes on file. That’s the last time they bother with it.

However, that form is really important. It tells the company how much of your money to withhold for taxes. When the tax laws changed last year, people were encouraged to update these forms. The main reason was that you’re no longer allowed to claim a personal exemption, so if you had claimed one, then you needed to change it.

That said, a lot of people didn’t know that they needed to update Form W4. If you didn’t do it last year, then you might not have gotten as much tax money back as you expected this year. Even if your tax refund was about average, it’s worth it to update your Form W4.

Understanding Form W4

Form W4, also called the Employee’s Withholding Allowance Certificate, tells your employer how much money to take from each paycheck to send to the government. Then when tax time comes around, you either owe more or get some of that money back. Most people prefer to get money back, so they find that it’s better to pay in as much as possible throughout the year.

You use a worksheet to determine your number of allowances. The more allowances that you have, the less money gets taken from your paycheck. That means there’s less money going towards what you owe on your taxes. Therefore, if you want more money to go towards taxes, then you need to take fewer allowances.

Of course, you have to claim the correct number allowances to keep things legal. You don’t want to go lying on your tax forms. But there’s a way that you can adjust this. The form has a section that asks if you would like additional money withheld from your paycheck. Most people mark “no” because they want to get that money right away. However, if you want to get more back at tax time (or at least make sure that you don’t owe anything come tax time), then you should think more carefully. If you have a lot of allowances, then you might want to use this section to increase your withholding to benefit you when tax time rolls around.

If You Have Exempt Status

It’s also important to note that you might have previously marked yourself exempt on this form. If you didn’t owe any money in the tax year before you filled it out, then you could claim exemption status. If you don’t make very much money, then that’s okay. However, if no money gets withheld, then anything that you owe at tax time has to come out of your pocket. Therefore, if you can afford not to claim exemption, then you might want to rethink doing so. If you pay in throughout the year and then don’t actually owe taxes, you get that money back in the form of a tax refund.

Remember that the more they withhold, the better off you’ll be. Of course, you don’t want to go into debt as a result. The IRS has a tax withholding calculator that can help you figure out the best solution for your W4.

Other Ways to Improve Next Year’s Tax Refund Starting Today

Updating your W4 form is the best thing that you can do right now to make sure that you get the best possible tax refund next year. However, it’s not the only step that you can take. Here are some other things that you can do:

Give to Charity

The new tax laws affected charitable giving. The changes made it so that more people benefitted from a standard deduction. Therefore, they didn’t do itemized deductions, which meant their donations to charity didn’t help them tax-wise. However, the new laws actually had some little-recognized changes that benefit people who do want to itemize deductions and get credit for giving to charity.

First of all, you can now deduct cash contributions as long as they don’t exceed 60% of your income. Secondly, there is temporarily (through 2025) no limit on total itemized deductions. Therefore, you can max out your donations to charity. You give to a good cause, and you’ll benefit on your taxes. Of course, make sure you read the detailed rules on charitable giving.

Save the Maximum in Your IRA

Your IRA is there to help you when you retire. You need that money. Therefore, you should be setting it aside now regardless of the tax benefits. That said, though, there are benefits, and it’s worth paying attention to them. The more that you put in your IRA, the better off you’ll be. You don’t even have to do itemized deductions to get this benefit. You can take that money right off the top when filling out next year’s taxes. You might even qualify for additional credit, the Retirement Saver’s Credit, depending on your income. Therefore, it’s to your immediate as well as your future benefit to contribute as much as allowed to your IRA account this year.

Review Your Credits and Deductions

When you file your taxes, you get to claim certain credits and deductions. Credits are great because they give you money back directly on what you owe. Deductions reduce the amount of taxable income, so they aren’t as beneficial as credits, but they’re still helpful. Most people don’t bother to review these things until it’s time to file taxes. However, if you have more information, you can make smarter choices throughout the year.

Review all of the credits and deductions that you might be able to get next year. Make adjustments accordingly. For example, you might get a deduction for paying student loan interest. If your student loans are currently set so that you aren’t paying interest, you might benefit financially from changing that. It can feel like a hassle to review those things, but it can also save you a lot of money come tax time.

Similarly, you might decide to upgrade your house with energy-saving in mind. You’ll save money immediately on energy, even though you might have to spend some time to upgrade. Furthermore, you might get tax benefits.

Even if you don’t change anything that you do right now, reviewing your potential deductions and credits can remind you to keep track of everything. The more you have written down come tax time, the better off you’ll be when it comes to finding those benefits.

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Is Putting a 20% Down Payment on a House Realistic?

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I understand the argument behind the advice of putting at least a 20% down payment on a house purchase. No one wants to pay private mortgage insurance and the idea of getting two different loans to avoid it isn’t that great either. I imagine if you are a previous homeowner and have some equity from a previous house to put down on a new one, a 20% down payment is very feasible, but what about first time home buyers?

Saving Up The 20% Down Payment has Huge Opportunity Costs

In the area that I currently live, the average home price is about $175,000 for a decent starter home. That’s actually a pretty low price compared to where I grew up across the state, where you can’t get a decent starter home for under $275,000. Let’s say someone wanted to buy a home for the first time. A 20% down payment for an average house in each area would be $35,000 and $50,000 respectively (and that doesn’t even include closing costs) Who has that kind of cash readily available? Not many people. So the advice many are given is to save up and wait.

Let’s look at what that would look like. Say you are able to save $500 a month towards your down payment. You are able to knock down your costs and pull aside that much every month. It would take you almost 6 years of saving $500 a month in order to afford the 20% down payment in the less expensive city and over 9 years to afford the one in the pricier area.

What if you were able to save $1,000 a month? Then it would take you 3 years and 4.5 years respectively. But saving $1,000 a month is quite difficult when you are trying to fund a retirement account and live day to day. Especially for up to 9 years. Most first home buyers are younger – probably in their 20s. In the best case scenario, you need to save for 3 years – in the worst case, it would be 9 years (this is assuming you already have a sizable emergency fund to take care of unexpected expenses).

It is even harder when you start looking at this from a market standpoint. House prices will rise. I don’t care what the housing market looks like now – eventually, the values will rise again. Let’s say values rise at a conservative 1% per year. In 3 years, each “average” house will cost at least $5,500 and $8,500 more, respectively. In 9 years, each house will cost at least $16,000 and $25,000 more, respectively.

Everyone who finally reached their 20% down payment goal will now need more money than originally thought for the down payment of a home that is now more expensive. Not to mention the money lost on throwing away rent rather than building equity (however small that amount may be in the first few years). Add to that the tax deductions missed and the missed opportunity to profit from the market’s increasing values. Ouch! Those numbers aren’t pretty. You have to spend money on housing either way – why not get some benefits from it?

Chances are, if you are saving a huge chunk of money each month for a large house down payment, you aren’t contributing the max to your retirement account. Your early investing years are the most critical for your future because of the wonderful concept called compounding interest. You could lose some very valuable interest time by waiting to invest (or increase your investment amount).

It Is Perfectly Reasonable To Buy A Home For Less Than 20% Down

Perhaps there are some people for which putting a 20% down payment on a house is not only possible but also a perfect fit for them. I personally don’t know any of those people and am not one of them. We chose to buy our house with no money down and use our monthly extra to invest more, stock up our retirement fund, fund our emergency savings, and make improvements to our house that will increase the value when we go to sell.

The funny thing is that our mortgage is not outrageous, we are not struggling to keep up with our payments and we are not in jeopardy of defaulting on our loan. The fact of the matter is that there are people who are a high risk to mortgage companies who will likely default on their loan if they get into a house with no money down. But there are also responsible people who will pay their mortgage on time every month who just want to have a choice of what to do with their extra money and how to best use it.

Can You Get A Mortgage For Less Than 20%?

Yes. You can get a mortgage for less than 20% down. The best way to find out if you can do this is to start making calls. You’ll want to talk with a mortgage broker. Probably you’ll want to talk with several. A good starting place might be USAA (they have great customer service) as well as your local credit union. Stay away from the bigger banks, they sometimes have incentives that are perverse (for example, by pushing low money down loans or adjustable rate mortgages).

Here Are This Year’s Tax Day Deals and Freebies

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Tax Day falls on Monday, April 15 in 2019. Usually, this is a day filled with money stress — at least for those who wait until the final day to file their taxes or pay their IRS bill. However, there are also some exciting Tax Day deals and freebies if you know where to look. Here’s how you can save some money on Tax Day specials and sales in 2019.

Restaurants

There are a surprising number of restaurant deals on April 15, 2019. If you need a chance to de-stress and would appreciate a nice meal, snack, or beverage, here are some options to check out on Tax Day.

  • Bananas Smoothies & Frozen Yogurt: Free small frozen yogurt on Tax Day
  • Boston Market: $10.40 meal special featuring a half chicken meal, two sides, cornbread, and regular fountain drink
  • Bruegger’s Bagels: Get 13 bagels and two cream cheese tubs for $10.40 (must be a Bruegger’s Inner Circle member or have claimed the offer at the company’s website
  • California Tortilla: Free chips and queso when you tell the server “1040”
  • Cici’s Pizza: $4.15 adult buffet with coupon and the purchase of a large drink
  • Firehouse Subs: Free medium sub with purchase of a full-price large or medium sub, chips, and a beverage (with coupon)
  • Great American Cookies: Free Original Chocolate Chip cookie (at participating locations)
  • Hardee’s: Free sausage biscuit between 7:00 am and 10:00 am when you say, “Made from scratch” (while supplies last)
  • Hot Dog on a Stick: Free veggie or turkey hotdog
  • Menchie’s: Free $5 frozen yogurt by downloading the app by April 15
  • Noodles & Company: NoodlesREWARDS members get $4 off mobile and online orders totaling $10 or more (must sign up for the rewards program by April 9)
  • Potbelly Sandwich Shop: Mention it is Tax Day and get a BOGO free deal for entrees
  • Schlotzsky’s: Free small original sandwich with chips and medium drink purchase
  • Smooth King: $2 off a 20-ounce smoothie (through the Smoothie King Healthy Rewards mobile app)
  • White Castle: 15 percent off any order (with a coupon that will be posted to social media and emailed to subscribers)

Retail

There aren’t as many retail deals for Tax Day. Usually, retailers focus on holidays, and April 15 is more like a deadline. However, that doesn’t mean you can’t find a great Tax Day deal or freebie, including those listed below.

  • Office Depot / Office Max: Free shredding (with coupon) for up to five pounds of documents
  • Planet Fitness: Free HydroMassage chair sessions (with a coupon that will be available starting April 11) for members and non-members

Travel

You may be surprised to learn that there are travel deals available on and around Tax Day. If you want to take a trip soon but haven’t started booking your accommodations, here are some deals to look into this April 15.

  • Holiday Inn Express & Suites: Guests who book a stay at the Miami location on April 15 get 20 percent off a future stay (future stay must be a minimum of two nights)
  • Hotwire: With promo code TAXGETAWAY15, get $15 off a $150 Hot Rate hotel deal
  • Orbitz: Sign up for Orbitz Rewards and book a hotel or vacation package on April 15 and the company will refund your sales tax as Orbucks Rewards points when you head to this site (which will be live on April 15).

More Tax Day Deals and Freebies to Come

There is still plenty of time for more retailers, restaurants, and other businesses to offer Tax Day deals, so don’t be surprised if you spot a few more before Monday, April 15. Here are a few places that offered Tax Day freebies and deals last year, but have yet to announce any official plans for 2019:

  • Bite Squad
  • BJ’s Restaurant & Brewhouse
  • Captain D’s
  • Chili’s
  • Outback Steakhouse
  • F. Chang’s
  • Piada Italian Street Food
  • Staples

While there is no guarantee that the above restaurants and retailers will offer a deal on Tax Day, it could be worth keeping an eye out. Usually, information about the specials and sales is available on company websites and social media accounts. Additionally, email subscribers might receive notification directly.

With a little planning, you can easily take advantage of several of these Tax Day deals. If you find yourself near a participating location, consider stopping in so you can enjoy the freebies and discounts.

Do you know of any other Tax Day deals and freebies people should know about? Share them in the comments below.

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Congress is About to Ban Free Online Tax Filing

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Just in time for Tax Day, Congress is backing a bill that will ban the Internal Revenue Service from creating a free tax filing system. The for-profit tax preparation industry is ecstatic to see this long-sought-after goal finally get attention on Capitol Hill. But what do these companies have to gain when we ban free online tax filing?

Can They Really Ban Free Online Tax Filing?

Well, that’s not exactly what is happening. You’ll still be able to file for free through third-party services. However, under the new bill, you would not be able to file for free online with the IRS.

Last week, the House Ways and Means Committee passed the Taxpayer First Act. The bill covers a large number of administrative changes to the IRS.

One of the many provisions outlined in the bill will make it illegal for the IRS to create its own online tax filing system. This will help shield the tax preparation industry’s profits. Popular tax filing companies, such as TurboTax, Intuit, and H&R Block, have lobbied for this for years.

In previous years, the IRS hasn’t made it easy for people to file with them (or cheap). The agency could provide even better services than the aforementioned companies with free online systems, pre-filled tax forms, and salary data. However, the IRS just hasn’t put that together for taxpayers. And, now, it may never get the chance to. The new bill would bar the IRS from doing so.

“This could be a disaster. It could be the final nail in the coffin of the idea of the IRS ever being able to create its own program,” said Mandi Matlock, a tax attorney with National Consumer Law Center.

Who Files For Free?

To be eligible to file your taxes for free, you have to make less than $66,000. About 70 percent of American taxpayers qualify to file for free but only 3 percent of eligible people do so.

Critics of the free filing program say the tax preparation companies deliberately underpromote the free services so that they don’t know they are eligible. Or, in some cases, they are upselling paid products versus informing people about their free tax filing options.

Banning the IRS Free Filing Service is a Business Move

There is already an understanding between The Free File Alliance, a private industry group, and the IRS that the IRS cannot create its own filing system. In exchange, the companies offer free services for folks who are eligible.

Passing the bill would solidify that “unspoken” agreement and put it into law. The Free File Alliance has told shareholders an IRS-created software or other IRS systems could pose a direct threat to their business dealings.

Last year, Intuit and H&R Block spent $6.6 million on lobbying related to this deal with the IRS. Not to mention, the House Ways and Means Committee received $16,000 in contributions from the two companies during the last two election cycles.

An H&R Block spokesperson said, “Free File should be the subject of ongoing improvement, and we are committed to working with all parties to strengthen and improve Free File on behalf of the American taxpayer.” The current bill, according to a spokesperson for Rep. Wyden (D-Oregon), is bipartisan and includes priorities of the chairmen and other ranking members.

Before anyone gets too excited about these changes (one way or another), the bill is currently being looked at by members of Congress. While previous efforts to pass similar bills have died out in the past, many people are worried that this may be the year the IRS gets cut out of the free filing game. The Taxpayer First Act, should it be passed, is also aiming to restrict the use of private debt collectors by the IRS to individuals over a certain income threshold.

Readers, what do you think about the potential ban for the IRS? Is it a good thing?

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