If my property taxes are billed late and do not become due and payable until next year, can I still deduct them on this year's return. Let me clarify. Tax bills went out today; they are due early January. If my mortgage company does not pay them until the due date (I have already paid all amounts into escrow) can I still deduct them on my 2007 return.
I would appreciate any advice from tax professionals or anyone else that knows. Code references will be especially appreciated.
2007-12-10 05:34:56 · 6 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
Thanks for the great answers. I knew this was probably the case. It just seems unfair that I have paid and am penalized for the county which cannot get its act together. These tax bills were supposed to go out in June and they are hoping to get them out today!
2007-12-10 07:28:17 · update #1
Thanks for the great answers. I knew this was probably the case. It just seems unfair that I have paid and am penalized for the county which cannot get its act together. These tax bills were supposed to go out in June and they are hoping to get them out today!
2007-12-10 07:28:18 · update #2
Property Tax bills are deductible when PAID.
If the mortgage company pays them in January, you would have to wait until your 2008 return to take them as a deduction.
2007-12-10 05:39:23 · answer #1 · answered by Wayne Z 7 · 3⤊ 0⤋
I am not a tax professional but have a good knowledge of the difference between a calender year and a fiscal one. I also took enough accounting to know what an accrual is, and from the information you provided, I would have to agree with the 4 people who answered your request accurately.
Putting an income tax into an accrual category is essentially how they work, as the government collects taxes from individuals all year long, yet the accountability of them isn't due until April 15th. The amount of tax refunded to you never includes the interest you could have earned on the overage should you have been allowed to keep it and invest it.
Conversely, the government doesn't charge interest or penalties in most cases, for money that is due them if you didn't arrange for it to be paid quarterly based on projections of earnings.
An example is a windfall, like a huge prize won on a quiz show. Your not going to be taking that prize without paying the taxes that will be assessed on it prior to it's actual award to you.
The government may seem to you to be in the business of losing money on projects that are worthless, but one "project" they don't lose money on is getting yours months before any accounting of it is due.
2007-12-10 15:37:23 · answer #2 · answered by Migsoon 2 · 0⤊ 1⤋
They're deducted in the year that they're actually paid. If your mortgage company pays them in 2008 you'll deduct them on your 2008 return in 2009.
If you were an accrual basis taxpayer it would be deductible in 2007 but ordinary taxpayers are virtually never accrual basis.
2007-12-10 14:02:03 · answer #3 · answered by Bostonian In MO 7 · 3⤊ 0⤋
Why don't you just ask the mortgage company to pay the bill in Dec?
2007-12-10 16:10:14 · answer #4 · answered by r_kav 4 · 0⤊ 0⤋
It depends if you use cash or accrual accounting. Most ordinary people use cash which means you deduct it when you pay it.
2007-12-10 13:40:01 · answer #5 · answered by Anonymous · 3⤊ 0⤋
For an individual it is cash basis. When they are paid.
2007-12-10 13:38:10 · answer #6 · answered by Tim 7 · 3⤊ 0⤋