The property tax headache that we knew it would be coming..

I think we all knew the difficult situation that we would face about the deduction of property tax in the 2017 tax return even before the tax season. The announcement about the new rules almost by the end of the year made this confusion almost impossible to avoid.

Here is the situation:

Client has his property tax paid through the lender through an escrow account. He has contacted the lender before the end of 2017 to make the 2nd payment of the 2017-2018 tax bill for him. The lender said they would do the best.

Now on the 2017 Form 1098, the lender added that payment in box 11 "Real Estate Taxes". So it implies the lender says the payment was made in 2017.

But when we checked on the county website, it says it was 'paid' on 1-18-2018. I think it must be the date that they finally had the time to process the payment. (Yes, I know, I know, they were very very busy)

So is it a 2017 deduction or is it not?

I'd go by the 1098, and be ready to defend if challenged.

I agree ; a copy of the 1098 INT form which typically includes the property taxes they paid on behalf of borrower goes to IRS. The mortgage company has the responsibility of reporting on the 1098 INT form the property taxes actually paid and they do a reasonably good job of that .

Many lenders provide a detailed analysis of the escrow account activity (those are the ones I really like . In your case, I think I'd ask the client to request one. Given how the counties were inundated with payments at the last minute, I can see how it might take eighteen days to get all the payments processed.

Agree with Belle, get the account transcript from the bank, the date they initiated the transaction would tell the tale, the face the county was too busy to process it for 3 weeks isn't the clients issue, or is it?

Given how the counties were inundated with payments at the last minute, I can see how it might take eighteen days to get all the payments processed.

I understand. But why did they have to use the date they processed the payment to be the 'paid date'? That is misleading and even a 4th grader would know that does not make sense at all. Even though they did not have the time to process all the payments right away (which is understandable), how difficult was it to keep track of when a payment was received? All mails received on 12/28 goes to container 1, all mails received on 12/29 goes to container 2, all mails received on 12/30 goes to container 3....., etc. And then when they eventually had the time to process the payments, they would know exactly when each payment was received and use it as the 'paid date'. It doesn't take a rocket scientist to figure that out.

My personal r/e tax payments show paid date online as when they process it, but I get a paper receipt stamped with the date they received it. (Discounts apply for payment by certain dates, so it's important.). Maybe your client's bank gets such receipts.

It's on the 1098, don't worry about it. It's no different than if you think there's an error on a W2. The W2 is the W2. If the error is big enough it's up to you to request a corrected one. If you don't do that then that's the official numbers. When's the last time the IRS sent out a letter saying we think your W2 is wrong? The only time that would happen is if a corrected W2 was issued but you used the original one. The IRS isn't going to question the banks 1098 either.

Bob

Thank you everyone for the advice and sorry for the vent. I do understand our public agencies are mostly understaffed and not able to provide the service that we expect. I guess it is something that we have to accept. But as for this particular issue, I just think it would be better for them not to provide the 'paid date' and leave it blank rather than putting one up there that everyone knows is incorrect.

Given how the counties were inundated with payments at the last minute, I can see how it might take eighteen days to get all the payments processed.

I understand. But why did they have to use the date they processed the payment to be the 'paid date'? That is misleading and even a 4th grader would know that does not make sense at all. Even though they did not have the time to process all the payments right away (which is understandable), how difficult was it to keep track of when a payment was received? All mails received on 12/28 goes to container 1, all mails received on 12/29 goes to container 2, all mails received on 12/30 goes to container 3....., etc. And then when they eventually had the time to process the payments, they would know exactly when each payment was received and use it as the 'paid date'. It doesn't take a rocket scientist to figure that out.

Um...just an observation - they are government employees?

It's on the 1098, don't worry about it. It's no different than if you think there's an error on a W2. The W2 is the W2. If the error is big enough it's up to you to request a corrected one. If you don't do that then that's the official numbers. When's the last time the IRS sent out a letter saying we think your W2 is wrong? The only time that would happen is if a corrected W2 was issued but you used the original one. The IRS isn't going to question the banks 1098 either.

Bob

I agree

Thank you everyone for the advice and sorry for the vent. I do understand our public agencies are mostly understaffed and not able to provide the service that we expect. I guess it is something that we have to accept. But as for this particular issue, I just think it would be better for them not to provide the 'paid date' and leave it blank rather than putting one up there that everyone knows is incorrect.

<bleep>. That is never an excuse for the private sector. With rare exception I have never seen employees of public agencies busting their asses to get things done. I have had conversations with many people who after working in the private sector took a government job. They were 100% appalled at what they saw. And these govt. workers get generous retirement benefits that the rest of us would die for.

That <bleep> was something that comes out of the rear end of a male cow. I guess the adults on here cannot tolerate such candid observation.

You will have to go with what the county says. If they had a pile of checks that the were not able to process in a timely manner they would post them as of the date the bag of mail came in, not when they finally opened it.

No, The SHOULD post them as of the date they came in. Not all jurisdictions have staff that will do that.

This is non-issue. You deduct the property tax payment when you paid it.

No need to worry about how the county records it in their records. In the extremely unlikely event IRS wanted substantiation, then you would not be able to use the county record to prove a 2017 payment. No biggie. Instead you would use a copy of the check and the bank statement that shows the check was cashed in 2017.