Property Tax Paid From Escrow Acct

[peggysioux]

1098 shows property tax paid in 2008 of $20,776.71; however, ending escrow account balance as of 12/31 08 is -$22,179.68. The transaction history shows disbursements from the escrow account but beginning balance as zero and nothing added to account in 2008. So it looks like the mortgage company paid taxes, not taxpayer. Would taxpayer be able to claim deduction for the property taxes paid?

[Burke]

I would check that out further to determine why it is showing real estate tax payments and a negative balance. It is not likely mtge co paid taxes with no money from homeowner.

[taxea]

Many mortgages include payment of taxes and home owners insurance through escrow. The amount placed in the account is the portion of the mortgage payment designated for this purpose. The escrow account increases until the taxes and interest are due and then it decreases with the payments and increases again as more payments are made on the mortgage.
Some mortgage companies detail the escrow account on the back of the 1098 statement. taxea

[Jesse]

1098 shows property tax paid in 2008 of $20,776.71; however, ending escrow account balance as of 12/31 08 is -$22,179.68. The transaction history shows disbursements from the escrow account but beginning balance as zero and nothing added to account in 2008. So it looks like the mortgage company paid taxes, not taxpayer. Would taxpayer be able to claim deduction for the property taxes paid?

A few years ago my sister had a similar situation, as she refinanced toward the end of the year and the new mortgage company received and paid the property tax bill leaving a negative balance in the escrow account. She was surprised they went ahead and paid it as she thought she would receive and pay this bill - as she did with the old mortgage company - and escrow was set up to pay the new years property tax bill. I took the deduction on the premise it was paid with "borrowed" funds knowing that she would be reimbursing the escrow account for this payment.

I would investigate a little more to find out the facts and circumstances as to why the mortgage company paid the property taxes if no escrowed amount was available. If nearing foreclosure and bank paid the taxes to protect their own interests I would not view it as paid from "borrowed" funds as the taxpayer will most likely not pay it back.

No cites - just opinion.

[BOB W]

This sounds like the reverse of taxpayers demands. Taxpayer comes in to do tax return. Statement only shows 1/2 year's worth of re taxes. Escrow agent paid in January instead of December. So May payment was made but no December = 1/2 year. Client says I made all my escrow payments on time I should be entitled to my full year RE taxes on my tax return. I say no, you are locked into your Agent's payment schedule.

So if an Agent releases funds to pay RE taxes I say take the deduction. But then, t/p made no payments. Check with T/P for what payments they made.

[peggysioux]

Property Tax In Escrow Account

Taxpayer did not pay property tax in 2007 and in the past paid taxes separate from loan; but 2008 1098 shows mortgage co. paid property tax, but escrow account now has a negative balance. I would think it is what Jesse suggested - taxpayer close to losing house. I had originally stated there was one 1098 with this situation. Taxpayer actually has a second rental with the same scenario. Would other tax preparers determine that taxes were not paid by taxpayer thus not deductible even though 1098 shows paid??

[peggysioux]

Property Tax In Escrow Account

I have an additional question - if I do not claim taxes as deduction on 2008 tax return and in 2009 or later years if taxpayer pays mortgage company for these taxes, would it then become deductible in that year even though1098 shows paid in 2008?

[BHoffman]

I have an additional question - if I do not claim taxes as deduction on 2008 tax return and in 2009 or later years if taxpayer pays mortgage company for these taxes, would it then become deductible in that year even though1098 shows paid in 2008?

I would absolutely take the property tax deduction as it appears on the 2008 form 1098 on the 2008 tax return.

And then I would go to bed or maybe have a little snack

[ChEAr$]

property taxes

One caution to all. Don't rely on the 1098 form for property taxes, beCAUSE.. the
amount paid to the tax collector by the mortgage company might just include certain
non deductible fees for things like garbage and fire service in rural areas.

For example in certain parts of the county inwhich I live, some people will pay $144 for
garbage service; others in a town, do not, but most everybody pays the $25 fire fee.
So I find myself having to determine where someone lives in order to subtract any
pertinent fees to arrive at truly deductible property tax

[kaimana]

Clients tend to provide their tax assessment which says on it "this is not a bill". I check the assessors office for the property tax paid. That report usually has discount and other fees in a separate area.

[newbie]

Really? You don't leave that up to your clients? One would think you would have them trained to bring in the receipt and not the assessment so you don't need to go out of your way.

[kaimana]

you know, some of you on this board are down right nasty...is your life that bad. I truly feel for you.

[BHoffman]

Who's having a bad day?

Did you do a search for prior posts on this subject? taxea

Don't you think it is easier to say what I did then to repeat everything that has been recently posted. I'm not the one getting testy. I am trying to point people in a direction that has already answered this over and over and over. taxea

Erchess...that's why I posted "if they work for a business that qualifies". Pub 17 is clear on what qualifies and I believe in letting preparers do there own research before posting an obvious question. taxea

My cilents are trained to understand... I expect the client to do the research. taxea

This issue has been discussed numerous times and there is a wealth of resource material out there to peruse...so how about searching for the answers rather than posting yet another question here. taxea

"Wife gets final 1040 on just her income,' ....from whom and why is wife getting a 1040? taxea

What is your taxprep background? taxea

All I am trying to get across is that if DIYers want to do their own returns they should rely on the instructions that come with the forms. Basic tax questions are answered in the instructions. taxea

If they can't understand the instructions they should not be doing their own returns. I am really trying to keep them out of trouble with the tax authorities by letting them know that they don't appear to be qualified enough to prepare their own return. taxea

I agree with Erchess and I stand on my prior post. This is a perfect example of a client who deserves to be reported if she is not willing to take your advice. taxea

...fill out your profile and I may spend more time with your questions. Pub 17 for starters. taxea

I train my clients from the first year. taxea

In less time it took you to ask for the form number and wait for an answer you could have looked it up. I'm not being rude but we are all busy and rely on each other for situations that may be foreign to us. It just isn't fair to expect simple basic research that you have the capability and knowledge to do. taxea

Tax software is not a substitute for a good tax professional. taxea

No matter the software...if you don't have even a basic understanding of the tax codes the software, especially DIY software, will let you make the kind of mistakes that can get you into trouble with the taxing agencies.
I stand by tax software is not a substitute for a good tax professional. taxea

How about the IRS pub for LLC's or 1065 instructions. taxea

Your answer is in Pub 17. taxea

as for your "tax program at home" you get what you pay for.

Home Mortgage Interest

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check Pub 17 taxea

Have you researched CIR230? taxea

I would read the instructions from Tx for this type of return. In Hawaii this type of tax is based on gross income not net income. taxea

you research Pub 17 and the IRS retirement publication to see how this is handled. taxea


To "unregistered and other non-professionals"

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Please, please, please go to your nearest IRS office and pick up a copy of Publication 17. Then research your question there before you ask it here. taxea

it would be more helpful to everyone if you would fill out your profile and do the research before you post your question rather than rely on others to take the time to do it for you. taxea

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I would get some tax training taxea

Do you prepare taxes??? If not why are you here??? If so, read Pub 17 taxea

Expensing start-up costs

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see Pub 17 taxea

Are these expenses deductible or depreciated?

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there are several places to research this...Pub 17 business expenses and Pub 535 business expenses. taxea

Rebates for deceased taxpayer

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Honestly...think about it...the IRS has a return with DECEASED written across the top...what do you think? taxea

Rebate-Direct Deposit

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Think about it! taxea


basic tax question...are you a pro? if not do your research before you post a question please. taxea

Just curious...are you a tax professional?taxea

please use resources available to you before posting basic questions. taxea

My clients have been well trained over the years. taxea





#4 02-15-2007, 03:41 PM

Senior Member Join Date: Jul 2005
Posts: 150

sorry

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It was the earned income credit that I was thinking of.
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#5 02-15-2007, 03:51 PM
taxea
Senior Member Join Date: Nov 2005

Posts: 672

Child Tax Credit-MFS

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When not thinking clearly one should rely on instructions and publications for the subject
taxea



#6 02-15-2007, 04:12 PM

Senior Member Join Date: Jul 2005
Posts: 150

to Taxea

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Now you're taking all the fun out of it.
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#7 02-15-2007, 05:13 PM
taxea
Senior Member Join Date: Nov 2005

Child Tax Credit-MFS

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Sorry...it was such a simple question and someone has to ask people to use the references before wasting our valuable time taxea


I'm outta here

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Hate to say it, hate to do it but I truly don't like the new format that doesn't let me see all the posts without back/forward option. Less time consuming the old way. Love the site, hate the new format....going to miss it taxea

Re Jainen

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I know a knowledgeable programer should be able to ban Jainen posts from appearing at all. Is this being worked on???? taxea

Sorry some people can be such putz's! I love and thoroughly appreciate your site!

Along with this could you make sure that all users have some kind of status that posts along with their user name that gives all of us an idea of their experience, expertise, knowledge?
taxea

[taxmom34]

Bh

OMG, you are awesome.

[newbie]

Clients tend to provide their tax assessment which says on it "this is not a bill". I check the assessors office for the property tax paid. That report usually has discount and other fees in a separate area.

you know, some of you on this board are down right nasty...is your life that bad. I truly feel for you.

Why do you think I was being nasty?

You talk about how you've trained your clients and say you won't take not even 2 secs to enter a soc sec no, filing status, and # of exemptions to verify stimulus received but you'll check the assessors office for the property tax paid? Just an observation, it really shocked me.

Kudos BH, who's down right nasty?