NY State and NYC - Homeowner tax rebates - how to handle them exactly?

[galandy]

Hello,

In 2022, I have received 2 different homeowner tax rebates:

1) New York State - "2022 Homeowner Tax Rebate" check - $334

2) New York City "Property Tax Rebate" check - $150

I entered the first one (the State rebate) in the "Homeowner Tax Rebate" credit portion of the New York taxes. That dialog says "If you are claiming itemized deductions you must reduce your federal property tax deduction by the amount of New York savings received in 2022". How exactly do I do that in the Federal return? Do I go to the mortgage 1098 section and manually decrease the amount for the "Property (real estate) taxes paid"? Or do I have to enter that in some other way?

And how do I factor in the second rebate check (the one from New York CITY)? Do I have to enter that anywhere in either the Federal and/or State section of the return?

Thanks

[JosephS1]

The tax rebates, if you itemize deductions, will offset the amount deducted for property taxes.  If you did not itemize deductions it will have no effect on your tax returns.

If you do itemize deductions, reduce the total property taxes shown on your Form 1098 and/or other forms for property tax and reduce the amount to put in your deductions for real estate/property taxes for the amount of the rebate(s).  

See the link below for additional information and scroll down for the treatment of it on your NYS tax return officially (there is no need to list it per NYS Dept of Tax)

Homeowner Tax Rebate

@galandy 

[MZ1010]

Hello,

When you apply for New York State property tax relief credit, where do you put New York City "Property Tax Rebate" check - $150? 

[JosephS1]

The New York City property tax rebate, along with the New York State property tax relief amount, is treated as a reduction of real estate taxes on Schedule A if you itemized deductions on your tax return.  If you did not itemize deductions, there is no tax effect on your return, and no need to list it as an income item.

As there is no line item for the Relief and/or Rebate in TurboTax specifically, and if you itemize deductions, you can calculate the net result manually and enter that amount in real estate taxes, or you can list them as a negative amount in property taxes with the label of NYS Property Tax Relief and NYC Property Tax Rebate.

NYS Property Tax Relief

NYC Property Tax Rebate

@MZ1010 

[redrhino]

where do I enter my homeowners property rebate in TurboTax?

[JosephS1]

No, you do not enter the rebate per se.  If you itemize deductions you would reduce the property taxes paid on your property by the amount of the rebate.  If you did not itemize deductions there is nothing you need do about the rebate except enjoy what you received.

For example, if you paid your property taxes directly, and if your total property taxes were $1,000, you would reduce the $1,000 you paid by the amount of the rebate.    If you escrowed your taxes, whatever the bank paid on your behalf would be reduced by the amount of the rebate.

There is some conversation about entering the property taxes paid in full and then entering a negative property tax amount for the rebate but my own belief is that would make it more complicated and prone to error and adjustment by the various taxing agencies.

@redrhino 

[junglejordan]

@JosephS1, thanks for your help!  I have a follow up question if you don't mind.  Unfortunately, it needs a bit of context ...

Each year, I receive a STAR tax relief / rebate / credit check from NYS.  And each year, I make sure that both my federal return and my NYS return reflect the actual property tax that I paid.  Here is the simple calculation that I use:

Real estate tax paid = Property tax paid + School tax paid - STAR credit received

This means that federal Schedule A Line 5b exactly matches NYS IT-196 Line 6.

Tax year 2022 has the added bonus of a one time 2022 homeowner tax rebate credit (HTRC).  No problem.  I'm handling it the same way as I do the STAR credit.  When I start working on my NYS return, Schedule A Line 5b still exactly matches NYS IT-196 Line 6.

What's throwing me is that I apparently qualify for a $350 real property tax relief credit in 2022 as well (IT-229).  But I don't learn that until my federal return is done and I'm working on my NYS return.  Once that credit gets taken into account, NYS IT-196 Line 6 becomes $350 less than federal Schedule A Line 5b.

Do I need to go back to the federal return and subtract $350 from Schedule A Line 5b?  I think that will totally foul up the numbers given that I use ~20% of my home for a business and real estate taxes are prorated accordingly.  So even if I subtract $350 from the federal return, only a portion of that amount will be reflected in my individual deductions.  Do you have any suggestions for what I should do?

Kind regards,

Sarah

[JosephS1]

Hello again Sarah.  Please keep in mind that you are what the IRS considers a "Cash Basis" Taxpayer.  Even if you qualify for the credits you mentioned, being that they are based on an as yet filed return, for 2022 you will not reduce the taxes paid in 2022.  You will account for the credit when you file your 2023 return as from what you are saying you will not receive the credit until AFTER you determine your 2022 tax liability.  No need to adjust Federal property tax expense taken until you file your 2023 return but remember to account for it then.

@junglejordan 

[junglejordan]

@JosephS1, thank you!  Your answer was very helpful and I appreciate you taking the time to respond.