
Missed the tax deadline? Here’s what you should do
If you haven’t filed your taxes yet, don’t panic — but act fast.
Heard of the property tax deduction but aren’t sure what it means? Bankrate explains.
Property taxes paid on real estate and personal property may be deducted from federal income taxes. If an individual pays property taxes, claiming the tax deduction is a simple matter of itemizing personal deductions on a tax return.
Some counties, cities, and states levy property taxes on various kinds of property. Real estate is almost always taxed, and each state, county and municipality has its own list of what kind of personal property is taxable, and specifies how taxpayers should determine an item’s taxable value.
Homeowners who itemize their tax returns can deduct state and local property taxes from their federal income taxes. Note that buyers of real estate who pay off delinquent tax liens from earlier years at closing are not allowed to deduct them from federal taxes. Payments such as these should be treated as part of the cost of purchasing a property rather than a property tax deduction.
If a taxpayer pays property taxes by depositing money into an escrow account each month as part of his mortgage payment, he should not treat the entire payment as a property tax deduction. Only the amount that the bank forwards to the Internal Revenue Service (IRS) is eligible for the deduction. That is because the amount a taxpayer pays to an escrow account is adjusted every year to be as close as possible to the exact amount due, but is never exactly the same amount.
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It’s important to remember that only itemized deductions that are above a taxpayer’s standard deduction reduce taxable income. Cassandra’s standard deduction is $10,000, her other itemized deductions amount to $9,000 and she paid $4,500 in property taxes. Her tax liability is only lowered by $3,500 by the property tax deduction because $1,000 is used to match the standard deduction amount.
If you haven’t filed your taxes yet, don’t panic — but act fast.
Typically, taxpayers have two options: Take the itemized deductions or take the standard deduction.
Regardless of what may cause a person to miss the tax-filing deadline, there are potential consequences.
Applying for more time to file your taxes is easy. Just don’t put off paying your tax bill.
The fast-approaching deadline for filing your 2021 taxes is April 18, 2022.
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