Hello, I’m Tammy from TurboTax, with important news for taxpayers who own their home.
If you own a home, it’s likely that you pay property taxes to your local government. But if you are used to writing checks, you may be interested to know that many agencies allow you to pay your property taxes online.
When you decide to pay your property taxes online, you may find more than one option to complete your payment. Many of the government agencies responsible for collecting property taxes now have websites that allow you to make your property tax payment online with a debit or credit card, or some will allow you to make an electronic payment directly from your checking account.
But even if your local government has yet to create a website capable of accepting online payments, there are many private companies that will process the electronic payment for you. Keep in mind, however, that these private websites usually charge a processing fee.
The IRS allows you to deduct all property taxes that you actually pay during the tax year, regardless of whether the tax is for a prior year or the current one. So, being able to make that payment quickly when December 31 is fast approaching may be necessary to get a deduction on your tax return.But remember, you can only take a deduction for these taxes if you itemize your deductions rather than taking the standard deduction.
If you use a credit card to pay your property taxes online, the IRS considers that to be a deductible payment despite the fact you may not pay your credit card bill by the end of the year. For example, if you owe $5,000 in property tax but you don’t have the funds to make payment until sometime in the next year, using a credit card to make the payment still qualifies you to take the property tax deduction. Depending on your tax rate and the other information you report on your return, making the payment by credit card may also be the reason you receive a tax refund instead of having to owe more tax.
One thing you should always consider is the interest rate that your credit card will charge. Depending on how soon you anticipate paying your credit card bill and the amount of interest you will pay—you may need to evaluate whether the benefit of a deduction is greater than the interest charges you’ll incur by putting these charges on your card.