Since it’s tax season, I figured I’d write about a DC tax credit that doesn’t seem to be all that well-known or publicized. I’d certainly never heard about it until TaxAct helpfully prompted me to fill out the information for it and boy am I glad it did!
Obligatory disclaimer: I am not a tax expert and am not licensed to be giving anyone tax advice. Talk to a professional before doing your taxes.
So, this credit is called Schedule H and is a homeowner and renter property tax credit. Basically, if you’re eligible, you get a refund if your property taxes (this applies for renters as well, as a percentage of their rent) exceed a certain amount of your income. I spent what was probably hours researching it online to make sure TaxAct was right that I qualified for it (I didn’t want to get the credit back, only to find I wasn’t eligible and owed that money plus penalties back to DC!) and most of the information out there was from 2013 and 2014.
I’m not a tax code expert but it looks like at one point a “household” could’ve included two roommates who weren’t related, weren’t in a relationship, and filed separately (something about if you shared a kitchen and a bathroom, you were a “household”). If their combined income exceeded the limit (I think it was $30,000 back then), neither of them was eligible for the tax credit. Which was a load of shit, because the only reason I live with a roommate is because I can’t afford my damn rent on my own! We’re not in a relationship, don’t share money at all, and I certainly would be living alone if I could afford it!
After a few days of disappointment thinking I was going to have to report my roommate’s income and thus not be eligible, I found the new rules for the 2016 tax year, which looked much more promising.
Here are the eligibility requirements (copy/pasta’d from here. Go to page 48 of the PDF for the Schedule H eligibility information):
• You were a District of Columbia (DC) resident from Jan 1. through Dec. 31, 2016;
• Your residence is not part of a public housing dwelling;
• You rented or owned and lived in your home, apartment, rooming house, or condominium in DC during all of 2016;
• Your 2016 federal adjusted gross income (AGI), plus the AGI of any dependents claimed on your return, was $50,000 or less ($60,000 or less if you are age 70 or older);
• You did not rent from a landlord whose property was either exempt from real property taxes or who paid a percentage of rental income to DC instead of paying a real estate tax;
• You must not be claimed as a dependent on someone else’s federal, state, or DC income tax return unless you reached age 65 on or before December 31, 2016.
So far, so good, except what about that pesky “household” definition that would’ve kept me from filing based on the old rules? The next section is Additional Information, which contains the following information:
“Only one claimant per tax filing unit can claim the property tax credit. There can be more than one tax filing unit in a home, apartment, rooming house, or condominium. If individuals or families share housing but file separate tax returns, each individual or family filing a tax return can claim the Schedule H credit based on their share of the rent or property tax” (emphasis mine).
There we have it: both my roommate and I could in theory claim this tax credit since we are separate tax filing units.
After checking with my landlord to make sure he isn’t using some powerful witchcraft to avoid paying property taxes (thankfully he’s not), I happily supplied TaxAct with my rent info. Here’s how the math breaks down:
-my AGI for 2016 was (here we go, folks) $37,728
-my half of rent paid in 2016 was (here we go) $1,050 * 12 months = $12,600
-20% of my rent (the amount theoretically going to property taxes for my landlord) is $2,520
-based on my AGI, I’m eligible for a refund on the property tax that exceeds 4.0% of my AGI. So my AGI * 4% is $1,509
-in theory I paid $2,520 in property tax but should only have paid $1,509 so the difference is $1,011
-the max credit is $1,000, so I was eligible for the full amount (and had to eat that extra $11)
Woo hoo, $1,000 added to my tax return! It doesn’t make up for the close to 50% of my paycheck that my rent eats each month (and I’m not sure why I wasn’t prompted about it for my 2015 taxes considering my AGI was more in the $32,000 range), but it’s certainly something and was a very welcome surprise.
I hope this helps some DC renter who is still doing their taxes and searching for information about Schedule H, or maybe someone who has already filed this year but might be still eligible next year!