Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
Illinois just sent out a pleasant surprise: a rebate for those who claimed the property tax credit on their 1999 Illinois 1040.

And who says the government never does anything nice for you?

But I know there must be strings. The letter states: "Please be advised federal law may subject this check to federal income taxes." I'm wondering what form that will take.

Simplest answer is probably that the rebate is treated as ordinary income.


Maybe yes, maybe no. And then, of course, if it is taxable income, what kind?

But since it is equal to the property tax credit I claimed, might it get tangled up with the amount of property tax I deducted on my 1999 Schedule A? That is, is it possible that I have to amend my 1999 1040 to reflect that I didn't really pay that much property tax since I got some of it rebated?

You definitely don't need to do that. Your 1999 return showed your deductions for 1999. If you received this income in 2000, it goes on your 2000 return.

You've called this payment two different things. I think the treatment of it on your Federal return depends on which it is.

If it's a reduction in your Illinois income tax, you treat it as an income tax refund on line 10 of the 1040. It's taxable income to you if you deducted your Illinois income tax paid on your 1999 Schedule A.

If it's a rebate of property taxes, it's line 21 miscellaneous income if you deducted the property taxes on your 1999 Schedule A.

If you didn't deduct the tax underlying the refund on your 1999 Federal return, you have no income to report on your 2000 Federal return.

TMF ExRO
Phil Marti
Print the post  

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement