In previous years, NJ did not issue a W2-G for the real estate tax
rebate. I treated the rebate as a reduction in real estate tax - e.g RE
Tax = $6000, rebate = $1000, RE Tax reported on Sched A = $5000. I will
continue to do that for 2007 unless anyone knows if there is anything
new on this subject.
I hope you meant 1099-G, as W-2G is for gambling winnings, not government
(Whether there's a covert feeling about property tax refunds being a crap-shoot,
I leave to the reader to decide) ;-)
IRS Continues to Remind New Jerseyans How to Report Property Tax
SPRINGFIELD - To help New Jersey taxpayers understand and meet their
tax responsibilities; the Internal
Revenue Service today explained the reporting requirements for the
Homestead and New Jersey Saver Rebate
"Taxpayers that claimed itemized deductions, including all of their
property taxes, on last year's federal income
tax return, will need to report the rebate as income for 2005.
Residents will not receive a Form 1099 from the
State of New Jersey since this is not an income tax refund," said IRS
Spokesperson Gregg Semanick.
"Rebates of this type are called 'recoveries'," Semanick said. "A
recovery is a return of an amount you deducted
or took credit for in an earlier year. In this case, it is the
deduction you took for your property taxes on your
2004 tax return. Taxpayers who itemized last year may have enjoyed the
benefit of taking a deduction for the
entire amount of their property tax payment. However, since they
received part of that deduction back in the
form of a property tax rebate, after they filed their return, these
taxpayers will have to report that rebate on this
New Jersey taxpayers can report the rebate on Line 21 of Form 1040.
Line 21 is designated for reporting
"Other Income" and has a space for describing the income. Taxpayers
can enter "Property Tax Rebate" in the
space provided on the return. Alternatively, taxpayers can offset the
rebate on their 2005 property tax
deduction on line 6 of Schedule A - Itemized Deductions. Line 6 is
designated for reporting a deduction for
"Real Estate Taxes."
Taxpayers who used the standard deduction, or who did not claim their
property tax as an itemized deduction on
their 2004 tax return, do not have to report the rebate as income. By
not claiming an itemized deduction for
property taxes, these taxpayers did not receive a special tax benefit
and therefore there is no taxable recovery.
The IRS suggests that taxpayers review the explanation of Other Income
in their Form 1040 Instruction booklet.
Taxpayers can find a more detailed explanation of Recoveries in IRS
Publication 525, Taxable & Nontaxable
Income, for further details on the property tax offset. Taxpayers are
also encouraged to discuss their specific
tax situation with the tax professional that prepares their return.
The computation they want puts it in a different tax year than the one
you put it in. As I recall, the effect is to undo the previous year's
state tax deduction, including the effects of tax bracket and reduction
of deductions over a certain amount of income.
It's unlikely they'd allow a choice in this, because people would take
the choice most favorable to themselves.
There has been a IRS notice on the NJ Department of Revenue that
indicates that the treatment that you have used is an allowable
alternative to reporting the rebate on line 21 of Form 1040.
Putting the rebate on line 21 of Form 1040 can subject you to
fraudulent IRS instuctions that can result in the taxable income
attributable to the refund being more than twice the amount of the
This is the second year for wide-spread school tax refunds in NY. These
differ from income tax refunds in that the checks we are receiving in 2007
are refunds of our 2007 school taxes. And we will not be getting 1099-G for
these refunds. There are three cases to consider:
A taxpayer who does not itemize, and whose refund is less than the school
tax actually paid, reports nothing.
A taxpayer who does itemize, and whose refund is less than the school tax
actually paid, reports his net school tax on Schedule A.
A taxpayer whose refund is more than the school tax actually paid reports
the excess on line 21.
for NY State tax Q&A on the so-called 'STAR' (School TAx Relief program) rebate.Gee, we should have done this for t/y 2006 Don? It wasn't until I saw the this thread about NJ this AM that I started to wonder if my brother, who itemizes (I looked over his return, but didn't actually "do" it since I'm not qualified for my own, never mind his!), did this. As he's away for the holiday, I'll have to ask him. 1040x time if he neglected to deduct on Sch "A", I assume?
"Andrew" wrote in
NJ has reminded taxpayers at least since 2005 or that tax reporting has to
include the home owners rebate. I don't remember how I did it (I could
look it up), just that I did. This year (2007) the rebate was a much
larger amount than in 2006.
Han - I think Don was pointing out what NEW YORK reporting was. I beleive
from what I've read in this thread there are differences in the two states.
As my both me and my brother are NY State residents, that's why I was
explicitly addressing the NY State post he made. (PS: Nice to see you over
here from Q!)
"Andrew" wrote in
Hi Andrew! Yes I lurk in here too. Sorry about confusing NY and NJ tax
issues. I think the OP had been referring to NJ, hence my confusion.
I presume you have, and will now provide, a citation to a (federal)
court case that supports your assertion that the IRS has published
"fraudulent ... instructions" on this issue.
I also presume you have, and will now provide, a link to the "IRS
notice on the NJ Department of Revnue" web site.
Here is the link to the notice on the NJ Department of Revenue website
that you requested.
Now here is a question for you. Why would IRS publish a notice the
indicates that a taxpayer can deviate from the instructions contained
in Form1040 instructions and Publication 525? Could it be that the
deviation works around the problem with the standard instructions?
Now, can you cite a court case that specifically sustains IRS
interpretation of section 111(a) of the Internal Revenue Code which
results in the gross income attributable to an itemized deduction
recovery exceeding the amount of the recovery? I am confident that
you will have no trouble finding multiple cases where the courts have
Because IRS sent me a letter* dated Ddecember (sic) 14, 2004, that
contained the following statement:
"Federal courts have consistently ruled against the arguments you have
Less than a month later, I received a refund based on the arguments
that the "[f]ederal courts have consistently ruled against".
Letter 3175 (SC) (Rev. 2-1999)
Cat. No. 26859J
BTW, North Carolina has dropped that MFS requirement where only one
spouse of a non-resident couple has North Carolina Income. You can
search this news group for more information on that issue.