Property Tax

"George Anthony" wrote

One would think so. Obviously if the $500 ($1000 MFJ) were less than the actual tax paid, then the amount to be included in income the following year would be the lesser amount.

But, Congress isn't known to use common sense and logic in tax matters.

If the recovery rule for an item which provided a Tax Benefit still holds, then it would generally be taxable.

But suppose the income following a $1000 increase to standard deduction is reduced to exactly zero and the exemptions would have wiped out taxable income even if the added standard deduction had never been claimed.

In that case the tax benefit of property tax is zero so a recovery of property tax should not be taxable.

It appears that the 2008 taxes will have to be reworked without the increase in the standard deduction and the difference compared to the amount of the rebate. The lessor of the two amounts would then be included as a recovery in 2009. For most people eligible for the property tax rebate this should not exceed $150. Will be interesting to say the least.

George L Anthony

"George Anthony" wrote

And a hearty "THANKS" to all the Congresscritters who voted for the Accountants Full Employment Act (the official title eludes me at the moment).

Here's a prediction. When/if I see any new clients year after next whose returns were prepared by VITA, AARP, etc. odds are that the property tax will be added to the SD even though no benefit is achieved thereby, and especially in case of senior citizens whose SD and exemptions already cause negative taxable income.

So then, if you don't need it, don't use it.

ChEAr$, Harlan Lunsford, EA n LA

True; all too true.

However I won't be increasing my fee just to add property tax to the standard deduction.

ChEAr$, Harlan Lunsford, EA n LA

"Internal Revenue Code"

Seth