It often makes sense for itemizers to prepay state and local property taxes. But there’s no tax benefit for nonitemizers, such as your elderly parents or in-laws, who claim the standard deduction.
Strategy: Encourage nonitemizers to prepay this year. Reason: The new housing law creates a special property tax deduction for nonitemizers.
The deduction can be claimed in addition to the standard deduction. But it can’t exceed the lesser of $1,000 ($500 for single filers) or the taxes actually paid for the year. To qualify for this tax break, property taxes must be reported on 2008 returns.
Tip: This tax break was initially available for 2008 only. But recent legislation extends it through ’09.
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