Amending Multiple Year Tax Returns

[TheEvilDead]

There are two people on the deed to my home.  The first person pays the mortgage and the second person pays the property taxes.  We have been filing all the property taxes on the first person's taxes because it is on our 1098.  However, it has recently come to our attention anyone can file for these property taxes just so long as their name is on the deed.  Michigan has the Homestead Property Tax Credit and the second person qualifies for all of it once we move the property taxes to their return and remove them from the first person's taxes.  My question is: Michigan allows people to amend their return for up to four years.  However, the federal is only three.  Do both people have to amend their taxes for 2017 on the federal side or just for the state?  For all the subsequent years, 2018, 2019, and 2020 this is obvious but no so for 2017.

[ColeenD3]

This will not work for the Federal side. There are two rules for the Federal deductions. 

For both mortgage interest and property taxes, you must be both liable for the debt and pay the debt.

Form Schedule A instructions:

Property tax: Enter on line 5b the state and local taxes you paid on real estate you own that wasn't used for business,

To qualify to be able to claim mortgage interest, you need to:

1. Own the home
2. Be liable to pay the mortgage, and
3. Make the payments

If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on a mortgage that was for your home, and the other person received a Form 1098 showing the interest that was paid during the year, attach a statement to your return explaining this.

Show how much of the interest each of you paid, and give the name and address of the person who received the form. Deduct your share of the interest on Schedule A (Form 1040), line 11, and print “See attached” next to the line. Also, deduct your share of any qualified mortgage insurance premiums on Schedule A (Form 1040), line 13.

Similarly, if you are the payer of record on a mortgage on which there are other borrowers entitled to a deduction for the interest shown on the Form 1098 you received, deduct only your share of the interest on Schedule A (Form 1040), line 10. Let each of the other borrowers know what his or her share is.

If you each make payments, it dilutes the tax benefits of your itemized deductions. In the future, for tax planning purposes, consider only one of you making the payments for the mortgage AND the property tax. The other alternative would be to pay them both from a joint bank account

[TheEvilDead]

I'm not really concerned about the property taxes deduction on the Schedule A form because the Homestead Property Tax Credit on the Michigan State side is larger than the deduction I get on the federal side.

We don't file jointly and we're not married but we both are liable for the property taxes but only I'm liable for the mortgage because the other person's name is not on the mortgage but is on the deed.

I mostly just need to know that if I amend my Michigan State taxes for 2017 do I still have to amend my federal taxes for 2017? Michigan state allows for 4 years while the FED only allows for 3.

[HelenC12]

No, you don't have to file a 2017 federal amended income tax return since the deadline to get a refund has expired.