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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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Hi, I have question regarding deducting real estate taxes.

Resolved Question:


I have question regarding deducting real estate taxes. According to the IRS literature I have found, if your taxes are escrowed, you are supposed to deduct the payments out of the escrow, not the payments into the escrow.

My scenario is a bit odd. We stopped making payments on the home in July 2008, our escrow funds went to zero before the end of 2008. Throughout 2009 the lender has been paying the taxes. We received a 1098 from them showing that the taxes paid in box 5. Can we deduct these even though we haven't actually paid into the escrow? According to everything I read, what is paid into the escrow seems to be irrelevant and I am thinking we can deduct.

Submitted: 7 years ago.
Category: Tax
Expert:  Merlo replied 7 years ago.

Hello JA Guest,


Even though you received a 1098 form showing that taxes were paid, if you did not fund the escrow account with your own money, then you may not claim this as a deduction on your return.


The IRS would not likely question the deduction since a 1098 form shows the amount as being paid under your SS number, but if you were ever to be audited and could not show that you had funded that account, your deduction would be disallowed.


If this was helpful please press the Accept button.


Thank you JA Guest



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