I currently do not have an escrow account.
My itemized deductions each year are shrinking and are fast approaching the standard deduction allowed by the IRS.
IF I pay my 2007 property taxes in Jan. 2008 and my 2008 property taxes in December of 2008. Can I deduct the sum of both on my 2008 Federal tax return?
2007-07-28 03:58:00 · 7 answers · asked by Terry 1 in Business & Finance ➔ Taxes ➔ United States
Sounds like you are talking about personal income tax and not business income tax, and if I am correct the answer is Maybe.
The key to the answer is --will all your deductions on Schedule A exceed the standardized deduction for your filing status. In 2006 it was $7,500 for single and married filing separate, $10, 300 for married filing jointly, and $7,550 for head of household. So if all your home interest, state and local taxes and charity gifts, misc. deductions, casualty/theft losses, and medical(limited amount deductible) does not exceed the standardized deduction, with the property tax payments all two years, you can consider it not deductible--because you want to take the largest deduction. Schedule A or the standard. Also, if your total itemized deductions exceed $150,500(75,750 if filling married separate), the deduction maybe limited. So there is a low and high range at which you fit into to take advantage of paying both years of property taxes in a single year.
2007-07-30 13:41:39 · answer #1 · answered by oldcorps1947 6 · 0⤊ 0⤋
Can I Deduct Property Taxes
2016-10-06 03:08:19 · answer #2 · answered by ? 4 · 0⤊ 0⤋
Yes you may deduct the real estate (property) taxes in the year that you pay them, even if they are not for that tax year.
What you are doing is called "pooling" your itemized deductions. By "pooling" them, you are paying them in the same year to maximize your deductions (BUT at the same time you will lose them in the other tax year - - 2007 property taxes will not be reported in 2007 tax return because you paid them in 2008 causing your 2007 itemized deductions to be even less).
2007-07-28 04:21:44 · answer #3 · answered by NoNickname 2 · 0⤊ 0⤋
You can deduct the property tax in the year you pay it regardless of when it may have been due. There would be some extreme case where that may not be true but in your example it would be fine. Now for the next year you would likely be short since you can't claim what you paid this year.
2007-07-28 04:18:42 · answer #4 · answered by ? 6 · 0⤊ 0⤋
You can deduct all of what you paid for 2007, minus the penalties and interest, if there are any for paying late, in whatever year you actually pay them. You'd have to decide if the benefit of pooling the 2 years together would outweigh any penalty your local tax authority would charge.
2007-07-28 13:02:19 · answer #5 · answered by shoredude2 7 · 0⤊ 0⤋
You can deduct it in the year when you pay it, so yes, with your example, you would deduct the payments for both years on your 2008 return.
2007-07-28 04:04:02 · answer #6 · answered by Judy 7 · 0⤊ 0⤋
Yes you can. You should also double up on charitable contributions.
2007-07-29 11:47:02 · answer #7 · answered by Houyhnhnm 6 · 0⤊ 0⤋