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thegoodsgt
Citizen
Username: Thegoodsgt
Post Number: 767
Registered: 2-2002
| | Posted on Tuesday, March 1, 2005 - 11:35 am: | 
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Okay, how many of you realize that you have to report your property tax rebate on your Federal tax return?
The "good news" is, since Acting Gov. Codey has suspended these rebates, this won't be a problem next year! Talk about mixed emotions....
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Biz Buzz: If you itemize, that rebate check counts
We hope your mailbox has been stuffed with 1099s and W2s, those formal reminders some income came your way last year.
Absent from the January flood was a property tax rebate notice from the state of New Jersey. But if you got a New Jersey Saver Rebate or Homestead property tax rebate check last year, there's a good chance you need to report it on your 2004 federal tax return.
If you itemized your 2003 deductions and took a deduction for your property taxes, then you have to include the rebate on your 2004 return, according to IRS spokesman Gregg Semanick, who is based in Springfield. If you didn't itemize and took the standard deduction instead, no rebate reporting is required.
Why didn't New Jersey send you a 1099? Because in the theology of taxation, what you got wasn't a tax refund: It was a "recovery," Semanick explained.
If you got a check from Trenton, you must remember how much it was for, and you must report that income to the IRS on Form 1040, line 21, which is where you report "other income."
This is hardly small change to the IRS: New Jersey sent $1.5 billion in property tax rebates last year to 2.5 million New Jersey homeowners.
http://www.nj.com/business/ledger/index.ssf?/base/business-9/1109141663158440.xm l
More property tax news at http://www.propertytaxnj.com/
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Sgt. Pepper
Citizen
Username: Jjkatz
Post Number: 720
Registered: 12-2003
| | Posted on Tuesday, March 1, 2005 - 11:55 am: |
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I still don't understand how a government (state OR federal) can call a refund of excess taxes paid "income." It's not income. They took too much of my income in the first place, realized it and gave some back to me.
Why isn't this double taxation? |
sportsnut
Citizen
Username: Sportsnut
Post Number: 1758
Registered: 10-2001
| | Posted on Tuesday, March 1, 2005 - 12:01 pm: |
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Sgt. Pepper the theory is that you took a deduction for the full amount of the property taxes you paid in a prior year. You then received a refund of a portion of those taxes. You need to look at it as if you shouldn't have deducted the full amount in a prior year.
Example - In year 1 you deduct $100 in property taxes that you paid. Year 2 you get a partial refund of year 1's property taxes. To the IRS you deducted too much in year 1 and you need to "recover" that amount.
This is not a new rule. |
sac
Supporter
Username: Sac
Post Number: 1862
Registered: 5-2001
| | Posted on Tuesday, March 1, 2005 - 12:02 pm: |
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It is income ONLY if you took a deduction for your property taxes last year, as most of us do in this high-tax state (on top of high mortgage interest in many cases.) This is the same as if you deducted your state income tax payments and then received a state income tax refund. The difference is that you DO get a 1099 form for the income tax refund, but not for the property tax rebate. I don't understand the differentiation there.
Another wrinkle - I believe that if your property tax deduction was reduced or eliminated by the AMT last year, then the amount of the rebate that must be reported is similarly reduced or eliminated. However, I'm not sure exactly how that calculation works. |
sylvester the investor
Citizen
Username: Mummish
Post Number: 17
Registered: 6-2004
| | Posted on Tuesday, March 1, 2005 - 9:50 pm: |
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now i have to go through the trouble of filing an amended return!!!!
So much for turbo-tax knowing everything. |
Candy
Citizen
Username: Candy
Post Number: 127
Registered: 8-2001
| | Posted on Wednesday, March 2, 2005 - 10:10 am: |
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I use Turbo Tax, and after you get to your state return, there is a section with instructions for the property tax relief check. But no, there is no info in the federal return section. |
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