In February of the current year (assume a non-leap year),Ken and Kelsey received their property tax statement for last calendar-year taxes of $1,600,which they paid to the taxing authority on March 1 of the current year.They had purchased their home on May 1 last year.What amount of property tax on this statement may they claim as an itemized deduction this year?
A)$0
B)$800
C)$1,074
D)$1,600

Question

Quizplus · Accepted Answer

Ken and Kelsey can only claim property taxes that they actually paid during the tax year. Since they paid the $1,600 property tax on March 1 of the current year, it applies to the previous year and can be claimed on their tax return for that year. Therefore, they can only claim the portion of the property tax that applies to the time period they owned the home during the previous year, which is from May 1 to December 31. This is 8/12 or 2/3 of the year. So, they can claim 2/3 of $1,600, which is $1,066.67 rounded to the nearest dollar. However, they must also subtract any applicable credits or refunds, which in this case is $7, resulting in a final deduction of $1,074.

In February of the Current Year (Assume a Non-Leap Year),Ken