Property Tax Deduction

[k5hdu]

Paid in excess $ 5,000.00 for property tax on my house here in Utah. Today, thought I might see how much that is helping me on my federal taxes. So, I set my property tax at 0 dollars and reran my taxes. I didn't see any changes in my federal tax due.  So, what is going on ? Sounds like I didn't get any reduction in my taxes by paying my property tax.

[DoninGA]

Property taxes are entered as an itemized deduction on Schedule A.  

The total of all your itemized deductions on Schedule A must be greater than the standard deduction for your filing status to have any tax benefit.

Standard deductions for 2021

• Single - $12,550 add $1,700 if age 65 or older
• Married Filing Separately - $12,550 add $1,350 if age 65 or older
• Married Filing Jointly - $25,100 add $1,350 for each spouse age 65 or older
• Head of Household - $18,800 add $1,700 if age 65 or older

[VolvoGirl]

Huh?  Did you have enough total deductions to itemize?  And by reducing the deductions that would increase your tax due, not reduce the taxes.  And why did you reset taxes to zero?  

And if you itemize there is a limit on deducting tax paid.  There is a max 10,000 limit (5,000 MFS) of property tax and state taxes "SALT".  SALT is State And Local Tax.  Which includes property tax, any state tax paid like for last year’s return and includes any state withholding from your W2s and any 1099s you have. And any taxes in W2 box 14 and 19 like SDI or VDI. You can only deduct up to 10,000 (5,000 MFS) for SALT State and Local Taxes.

Since the Standard Deduction has increased so many people will be switching to the Standard Deduction.  And there is a max 10,000 limit (5,000 MFS) of property tax and state taxes "SALT".  SALT is State And Local Tax.  Which includes property tax, any state tax paid like for last year’s return and includes any state withholding from your W2s and any 1099s you have. And any taxes in W2 box 14 and 19 like SDI or VDI. You can only deduct up to 10,000 (5,000 MFS) for SALT State and Local Taxes.

For 2021 the standard deduction amounts are:

Single 12,550 + 1,700 for 65 and over or blind (14,250)

HOH 18,800 + 1,700 for 65 and over or blind

Joint 25,100 + 1,350 for each 65 and over or blind

Married filing Separate 12,550 + 1,350 for 65 and over or blind

[NCperson]

@k5hdu - it's one of two things

1) you take the standard deduction in which case the property taxes have no impact

2) your state taxes exceed $10,000.  if you itemize, State and Local Taxes ("Salt") are limited to $10,000, so it could be you had more than $15,000 of state and property taxes so that eliminating the property taxes still meant you had more than $10,000 in SALT, so it doesn't change anything. 

[k5hdu]

Yep, that 's what it is. In the past, I had a business and itemized. Now that I am retired, I take the standard deduction and get no benefit from paying interest or taxes. Might as well pay the loan off. Thanks for pointing this out. 

[VolvoGirl]

You might have always taken the Standard Deduction.   Don't confuse itemized deductions on schedule A with your business expenses/deductions on schedule C. They are separate. For Schedule A personal deductions, you get to take your itemized deductions or the standard deduction, whichever is larger.  Itemized deductions are things like Medical, Gifts to Charity, State Income Taxes Paid, Mortgage Interest, Property Taxes, Car Registration fees, etc.

You get to take both,  your business expenses AND the Standard Deduction (or your personal Itemized Deductions).  And you have to enter your business expenses.  Be aware, if you have self employment income you can get in trouble for not reporting all your expenses to qualify for the EIC.

[k5hdu]

Thank you for the prompt reply and info. After retiring and no longer itemizing, I take the standard deduction. Makes sense.

[witeki1]

can I deduct gas ffor the car driving to the job ,parking paaaay in Hospital ,uniform I am RN

[NCperson]

@witeki1 commuting costs are not tax deductible...that is true whether you are a W-2 employee or a contractor. 

[VolvoGirl]

@witeki1   No you can't deduct commuting.  And job expenses are no longer deductible.  Unless you get a 1099NEC for self employment instead of a W2.