I am claiming itemized deductions, so where to I deduct my NY property tax relief and STAR credit on my Federal return? When filling out my NY return it says I must.

[kyleyoungs]

When filling my NY State return I reported the two NY tax breaks I received, Property Tax Relief and STAR credit.  When filling them out it says I need to reduce my federal property tax deduction by this amount, where do I do this on my Federal return?

[kyleyoungs]

[mention://77326720 @TurboTaxMinhT] They are higher than the credits! Should I just lower the amount reported on my 1098 and check the box stating that the amount that I entered is different then on the 1098?  or is the way that you instructed above the best way?

[MinhT]

You reduce the amount reported on form 1098 by the amounts of the 2 credits and enter the net amount. You do not need to check the box stating that the amount is different from the amount reported on the 1098, as this box applies only to mortgage interest. Hope this helps!

[kyleyoungs]

Yes, that’s correct. Thanks!

[kyleyoungs · Accepted solution]

In the same location you enter your 1098 there is a real estate total that you can manually change.

[MinhT]

On your federal tax return, you reduce the amount of your property taxes by these 2 amounts and report the net amount as Property Taxes under Deductions & Credits > Your Home > Property (Real estate) Taxes.

[kyleyoungs]

@TurboTaxMinhT you are not able to apply negative amounts in that section.

[MinhT]

So, these credits were from property taxes that you paid in prior years. In this case, you report the credits as Other Income.
• Click on Federal in the left-hand column, then on Wages and Income on top of the screen
• Scroll down to All Income, locate the Less Common Income section
• Click Show more and click Start next to Miscellaneous Income at the bottom and click Show More
          On the next page, click Start next to Other Reportable Income

[kyleyoungs]

It seems like there should be somewhere under the federal property tax section that should allow you to do this.  These tax breaks are paid out in 2017 and on the NY return it says "If you itemize your deductions, and received your check(s) in 2017, reduce your deduction for real estate taxes paid by the credit amount(s).".

[MinhT]

If your 2017 property taxes are higher than the amounts of the credits, then you can deduct the credits from the property taxes and claim the net amount. If the credits are higher, you cannot deduct them the 2017 property taxes as it would result in a negative net amount and you report the credits as otherincome. Tax-wise, this achieves the same result.

[MinhT]

If the property taxes are higher than the credits, then deduct the credits from the amount of property taxes and enter the net amount as property taxes.

[kyleyoungs]

@TurboTaxMinhT thanks for your help on this!

[NY2]

If the reductions to the property taxes paid are applied when entering Form 1098 in the Federal Return, should the credits also be reported in the NYS Tax Return?  Turbo Tax for New York State has a section asking for both the amount of any STAR or Tax Relief Credit received.

[EMB2]

I have the same question. The page in the NY state section is badly worded.  It says not to enter the STAR credit if it's reflected on your property tax bill, then says you need to "reduce your federal deduction" if you are itemizing. So if I'm itemizing, but I already reduced the real estate taxes by the amount of the STAR credit, does that override the instruction not to enter the STAR credit or not?

[Cynthiad66]

You will not account for it on both returns. You will deduct it on your federal return only. Then, the new amount with the deduction will flow over to your New York state return.  NY Star Credit

f you are eligible and enrolled in the STAR program, you’ll receive your benefit each year in one of two ways:

• STAR credit check. If you are registered for the STAR credit, the Tax Department will send you a STAR check in the mail each year. You can use the check to pay your school taxes. You can receive the STAR credit if you own your home and it's your primary residence and the combined income of the owners and the owners’ spouses is $500,000 or less.
• STAR exemption: a reduction on your school tax bill. If you’ve been receiving the STAR exemption since 2015, you can continue to receive it for the same primary residence. As long as you remain eligible, you’ll see a reduction on your school tax bill for the amount of your STAR exemption. Note: The STAR exemption is no longer available to new homeowners.

STAR Resource Center