I received a Homestead benefit on my property taxes in N.J. . do I subtract this on Federal when I input property taxes?

[ChristinaS · Accepted solution]

The NJ Homestead Benefit reduces the taxes that you are billed. Because the benefit is no longer handled as a rebate, it is no longer accounted for on your federal (or NJ) tax returns.

When you report your property taxes paid, you already account for this benefit. You would only have over-deducted if you ignored the property taxes paid when taking a deduction, and instead used the rate from your green card or the yearly rate based on an assessment.

So, if your property taxes in 2016 were $8000 and you received a Homestead Credit that year of $150, you would only have paid $7850. You deduct $7850, and you do not recover the $150 as income.

This is different than how it used to be handled, as they used to issue a check. If you account for the benefit as income now, you will be paying taxes on it twice-

Once, as income. Twice, because the rebate reduces the taxes you pay in the current year.

[cmvoegeli]

That makes sense for the Federal, but what about when I file with NJ?  In the 2017 NJ 1040 Book page 31 it says to add the amount you paid plus the amount of the homestead rebate.  Using the example above-- for NJ state filing would you write the full $8000 (so that the full amount is counted in as a deduction)

[Cash1]

I agree with your analysis.  Last year, turbotax didn't account for the nj instructions of reporting the full property tax, not the net taxes paid because of the rebate when I prepared my return.  If i recall correctly, it netted it out automatically so I had to manually file my state taxes to account for the full amount.  I'll see when I get to the 2019 return to see if it's done correctly.