Property Tax Changes

You probably know about taking deductions to reduce your tax liability. To be clear, deductions are not the same as tax credits – deductions are applied to your earned income before calculating taxes, and thus reduce the amount on which you are taxed. Tax credits are more valuable, and are a direct credit towards the tax that is due.

When you do your taxes each year, you can either take a standard deduction, or you can keep a record of tax deductible expenses and choose to use that if it is greater. For 2008 the standard deduction is $5450, or $10,900 if married filing jointly.

It seems that many people I speak to have not heard that this year you can claim at least some of your property taxes as a deduction, even if you do not itemize your expenses. The law allows you to add your real estate taxes to the standard deduction.

There is a limit of $500, or $1000 for joint filers, so it can save you paying taxes on $1000 of your income. This is all part of the plan to stimulate the housing market.

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2 Comments

  1. lewis
    Posted February 17, 2009 at 12:35 pm | Permalink

    i don’t know so much about taking deductions to reduce your tax liability,thanks

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  2. Posted March 11, 2009 at 2:35 pm | Permalink

    Seems like you would itemize if you have property taxes and interest deductions from mortgages. Putting everything on the 1040 only makes the 1040 longer.

    Free Tax Preparation’s last blog post..Don’t Take Your Losses!

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