property taxes and bunching deductions

Yes that's fine. Property taxes, even for future years, are deductible when paid.

Steve

One thing yet to consider. Remember that we may deduct property taxes regardless of whether other deductions are itemized. So the only way you might benefit is if you will be in a MUCH higher tax bracket in 2010 than in 2009. And I doubt that any local tax unit penalty will be low enough to make up for the change in bracket. But it might. The exception (they say) proves the rule.

ChEAr$, Harlan Lunsford, EA n LA

I've always assumed assesors make the tax payable in an interval that straddles year-end so as to help out people trying to fine-tune their deductions.

Mostly interesting to overly wealthy landowners but the rest of us get to play too.

Steve

But only up to $500 ($1,000 MFJ) of real estate tax can be added to the standard deduction. Even here in California for long-time owners of the same property, that is typically still much less than the total bill.

-Mark Bole

Thanks for the re-assurance, folks. Yes, I know about adding $500 of prop tax to standard deduction, and yes, my bill is WAY more than that.

Now if only I could get the county to refund my 2009 payment. I promise to pay it again in 3 weeks, honest !! But I'll know for the future ...

Also, if you expect to be in AMT in 2010 but not 2009, then it's better to pay 2010 taxes, and maybe even 2008 taxes as in this post (and maybe even 2007 :), in 2009.

In my county you can make the Dec payment by credit card, paying a small processing fee and then pay the credit card off when it comes due in January. The credit card fee ($11) is smaller than the late payment fee of 10% both of which are smaller than most marginal tax rates.

Wow, so it's dated by when you pay the credit card bill, not when you charged it ?

I cannot see how you reached that conclusion?

The deduction date is when the charge posted to your credit card account, and not when you paid the credit card bank.

For an individual (using the cash-basis accounting method), ONE future year is permitted. Taxes paid more than one year in advance are NOT deductible when paid.

The rule exists as a result of the difference in fiscal years of most counties not being on the calendar year.

When was this changed?

Steve

Some Revenue Ruling at a minimum.. 25 years ago.. maybe longer. A taxpayer can not deduct taxes paid unless the tax is determinable as to amount and fact of assessment. You can't just pick an amount, pay it and get to deduct it. There are also numerous rulings on prepayments that generally (there are exceptions) limit a taxpayer to what is known as the one year rule. So.. if you have been assessed your property taxes (you got a bill), you can pay it and deduct it. There was a thread on this a while back, and there were some jurisdiction that sent a bill at the end of the year for the next year and the current year was not yet delinquent. That put the maximum at two years for that specific jurisdiction.

The applicable code section and paragraphs are in Sec. 461 of the IRC.

I thought with credit card charges, you could do it either way.

Nope, it's date of payment which counts.

Harlan

Is that something for property payments but not,ay,medical expense payments?

I always learned it's the sate the charge posts to your credit card account, and not the date you pay off the credit card, which could be years from now.

Or am I just misunderstanding you?

For medical expense payments, here is from Pub 502 page 3

Begin Quote:

If you use a credit card, include medical expenses you charge to your credit card in the year the charge is made, not when you actually pay the amount charged.

End Quote

Yep. Date of payment is the date charged on the card, whether tax payments or medical payments.

OK, we're in sync and all remains right with the world.

That's the date _I_ charge it on the card, not the date the bank charges to my account, right? (That would make it similar to mailing a check.)

Seth

Thanks for clarifying. My memory must have faded. You can do it either way, if you pay in year one with a credit card, or in year two, paying without the credit card. Either way, you are out the cash in year two.