Homeowners can deduct property taxes and mortgage interest as an itemized deduction. Homeowners who don't have enough itemized deductions to exceed their standard deduction are better off using their standard deduction as that will result in the lowest federal income tax.
The Housing Assistance Tax Act of 2008 allows homeowners to claim an additional standard deduction for property tax if the taxpayer does not itemize. The additional amount is limited to $500 or $1,000 for joint filers.
The amount is claimed as an additional amount on top of their standard deduction.
The additional amount that can be claimed is the lower of the following two figures:
the amount of real estate property taxes paid during the year to state and local governments; or
$500 ($1,000 for married taxpayers filing a joint tax return).
This additional standard deduction applies to tax year 2008 only. This deduction is not available for any other tax year.
For 2008, here are the standard deduction amounts:
Single: $5,450
Head of Household: $8,000
Married Filing Joint: $10,900
Married Filing Separately: $5,450
Qualifying Widow/Widower: $10,900
Dependent: $900-$5,450
*Additional Amount if Blind: $1,050
*Additional Amount if age 65 or older: $1,050
*Additional Amount for property taxes: $500 or $1,000 for married filing jointly
*Dependents must calculate their standard deduction using an IRS Worksheet.
Tips for the Additional Standard Deduction for Property Taxes
This additional standard deduction will likely work more efficiently for taxpayers who have no mortgage interest to deduct, or whose total itemized deductions do not exceed their standard deduction.
For example, married taxpayers who are both over age 65 and who file a joint return would have a standard deduction amount of $13,000 (that's $10,900 plus the additional amount of $1,050 for taxpayers age 65 and older). With an additional $1,000 for property taxes, their total standard deduction would be $11,900. Let's assume they paid $10,000 in property taxes, and have no other itemized deductions, such as for mortgage interest or charity. In this case, their standard deduction is higher than their itemized deductions. Taking the standard deduction in this case would result in a lower overall tax than if they itemized.
The Housing Assistance Tax Act of 2008 allows homeowners to claim an additional standard deduction for property tax if the taxpayer does not itemize. The additional amount is limited to $500 or $1,000 for joint filers.
The amount is claimed as an additional amount on top of their standard deduction.
The additional amount that can be claimed is the lower of the following two figures:
the amount of real estate property taxes paid during the year to state and local governments; or
$500 ($1,000 for married taxpayers filing a joint tax return).
This additional standard deduction applies to tax year 2008 only. This deduction is not available for any other tax year.
For 2008, here are the standard deduction amounts:
Single: $5,450
Head of Household: $8,000
Married Filing Joint: $10,900
Married Filing Separately: $5,450
Qualifying Widow/Widower: $10,900
Dependent: $900-$5,450
*Additional Amount if Blind: $1,050
*Additional Amount if age 65 or older: $1,050
*Additional Amount for property taxes: $500 or $1,000 for married filing jointly
*Dependents must calculate their standard deduction using an IRS Worksheet.
Tips for the Additional Standard Deduction for Property Taxes
This additional standard deduction will likely work more efficiently for taxpayers who have no mortgage interest to deduct, or whose total itemized deductions do not exceed their standard deduction.
For example, married taxpayers who are both over age 65 and who file a joint return would have a standard deduction amount of $13,000 (that's $10,900 plus the additional amount of $1,050 for taxpayers age 65 and older). With an additional $1,000 for property taxes, their total standard deduction would be $11,900. Let's assume they paid $10,000 in property taxes, and have no other itemized deductions, such as for mortgage interest or charity. In this case, their standard deduction is higher than their itemized deductions. Taking the standard deduction in this case would result in a lower overall tax than if they itemized.
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