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IRS says you owe taxes on $100 property tax refund Rebate not so great Monday, February 12, 2001 By Patricia Sabatini, Post-Gazette Staff Writer
The Internal Revenue Service has issued a gentle reminder for homeowners who received the $100 property tax rebate from the state last fall: The money has to be declared as income on federal tax returns for 2000.
More than 2.5 million homeowners received the rebates, putting the issue on the IRS' radar screen.
On average, taxpayers will owe $21 of the $100 rebate to the IRS, the agency said.
Taxpayers who didn't claim property taxes as an itemized deduction in 1999, or who used the standard deduction, do not have to report the rebate.
The rebates are not subject to state income taxes.
Itemizers should report the rebate on line 21 of Form 1040, which is designated for declaring "other income." Taxpayers should enter "property tax rebate" in the space for describing the income.
Members of the same household who split their property tax deduction on their tax returns also may divvy up the rebate, IRS spokesman Bill Cressman said. For example, married couples filing separate returns may divide the rebate in half and each claim $50 as income, even if the check was made payable to only one person.
Some taxpayers and tax preparers planned to report the $100 rebate on line 10, which is where state income tax refunds are reported, Cressman said. Others planned to subtract it from the property tax deduction they take for 2000.
While reporting either way won't change a person's tax liability, it could trigger a letter from the IRS.
"Putting [the rebate] in the right place causes the least amount of questions," he said.
Want to know more? Call the IRS at (800) 829-1040, or try the state's Web site at http://www.revenue.state.pa.us/century/.
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