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I paid the second installment of my property taxes late for 2014. They were due 2014, but I paid them in 2015.

Can I deduct them on my 2014 taxes, or do I need to wait until I file in 2015?

In other words, do you get the deduction based on when you pay the tax, or when the tax is assessed/incurred?

Edit: also, I assume penalties are not deductible?

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  • Just as a minor point, the (real) property tax that was billed to you in 2014 and which was due in two installments during 2014, is the tax that you owe for 2013, not for 2014. As firedfly's answer points out, you get to deduct property taxes on Schedule A for the year in which you paid them. One other point: if this is property tax on your personal residence, you get a tax credit of 10% of the property tax that you paid on your Illinois state income tax return. Feb 16 '15 at 20:34
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If you paid them via government website, mailed a check, or authorized a credit card after 11:59 PM on 31 December 2014, you have to count them as a 2015 deduction. If it was by credit card, it depends on when you authorized the transaction, not when you sent a payment to the credit card company.

If you paid the taxes via monthly escrow payment, and the escrow company messed up, you might have an issue to argue it as a 2014 expense.

Just think some people use this approach as an opportunity to bunch their deductions. In 2015 you will have 1.5 times the normal property tax. In some cases that can be the difference between itemizing and not itemizing.

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Per IRS Topic 503 (http://www.irs.gov/taxtopics/tc503.html), you can only deduct the tax during the year you paid it. Since you paid the tax in 2015, you will have to wait until next year to include it on your 2015 taxes.

I'm not sure what the Illinois state taxes say about the topic, but I would imagine they would be the same.

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