Does a NYS Property Tax Relief credit check count as taxable federal income?

[SandraM]

No, these checks are not income. However, if you are a homeowner and claim property taxes as an itemized deduction, you will reduce your deduction by the amount of the check.  If you claim the Standard deduction on your 2017 tax return you will not need to do this. 

[Edited 2.12.18|11:12 AM]

[photobug56]

NY mailed my check Dec 31, 2019, and it arrived Jan 3, 2020.  I will deposit it by about Jan 8.  What year's property tax does this go against?  If I'd had it before Jan 1 2020 that would have been obvious to me.

[DaveF1006]

While it is true that you did not receive the check until 2020, you should apply the credit for the tax year 2019. Otherwise, you would claim the full real estate property tax deduction in 2019 and report the credit as income recaptured in 2020. 

[photobug56]

To make things more confusing, I did not itemize last year (2018), but I MIGHT itemize my 2019 taxes (just too soon to tell).  

As I recall, you normally reduce what you claim as property tax deduction by this credit (in the details for my prop tax in TT).  Ignoring, of course, that the Trump tax increase means that I can only deduct the first $10k of my state income and local property tax, which are way above $10k.  So if I don't itemize, what do I do in TT about this credit?  If I do itemize, I'd think that given that I have at least $20k in total SALT that taking it off my prop tax total will have no effect.  

Thanks,

Ron

[BillM223]

You do not have to do anything. There is no requirement on the federal return that you make any adjustments for itemized deductions if you take the Standard Deduction. 

But you might see this New York State link to see if the comments here apply to you.

[singardia]

If you take the new Star Credit vs the Star Exemption, does that also have to be deducted from your taxes if you itemize?

[photobug56]

Let's start from scratch.

1. We get a reduction in our property tax, called STAR, on our property tax bills.

2. We get a check - this year mailed out to many on Dec 31, 2019 (rather than direct deposited as NYS could easily do) of a property tax rebate from the state.  Not sure what it's called, and if you lose the paper that comes with it you're in trouble.  Plus there are no clear instructions as to what you do with it.  My UNDERSTANDING is that if you itemize it gets subtracted from what you claim for your property tax.

3. There is this new credit.  Even online I can't find a clear English language explanation that helps me understand what to do about it.

Anyone out there who can explain all this?

[singardia]

I just called the NYS Dept of Taxation and Finance and they confirmed that the STAR Exemption, STAR Credit checks and Property Tax Relief checks all are deducted from your taxes that you report on Schedule A if you can itemize.   Does that answer all of your questions about what to do about these rebates, exemptions and credits?

   Steve

[MaryK4]

Yes, if you receive the Star credit, you must reduce your Itemized Deduction for property taxes by the amount of your credit.

@singardia

[photobug56]

That's my interpretation as well.  But it would be nice if they just took the amounts off of your property tax bills directly.  This is a great example of NYS trying to make doing your taxes harder.

[csilva7106]

So what's the right way to do that in TT? I received a 1098-Mortgage form and in box 10 they report my property (real estate) taxes (as it gets paid out of my escrow). Do I just leave that blank when I'm entering in that form and then manually enter in a number for property taxes ( = the number in box 10 minus NYS property tax relief and STAR credit?). 

Also, at the end of the NY state return on TT it asks about the property tax relief and star credit checks, and has you enter numbers for each. But entering it there doesn't seem to do anything... so what's the point of entering it at that point?  I'm back to assuming I need to do it on the federal return before I ever get to the state return regardless?

[KrisD15]

Please reduce the amount of property tax you paid by the amount of the credit and enter that in the Federal section of TurboTax. 

The credits are also entered on the New York State section, but that is only used to generate a IT-119 if applicable. It will not adjust the amount reported on the Federal Schedule A. 

[JerseyJane]

If you received a check for the School Tax Relief (STAR) credit, you do not need to do anything on your New York State income tax return unless you itemize your deductions. see: Search Tax: star credit in 1099 (ny.gov)