IRS Continues to Remind New Jerseyans How to Report Property Tax Rebates - Release No. NJ-2006-03

Sep 19, 2026

IRS Release No. NJ-2006-03 explains how New Jersey taxpayers must report Homestead and New Jersey Saver property tax rebate program payments. The notice states that claimants who took itemized deductions for property taxes in 2004 must treat the rebate as income for 2005, described as a “recovery.” It provides filing guidance for reporting on Form 1040 Line 21 or offsetting on Schedule A Line 6.

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Reporting requirements for property tax rebates

When the rebate must be reported as income

Where to report on Form 1040 and Schedule A

Who does not need to report and reference resources

For Release: January 10, 2006 Release No: NJ-2006-03 IRS Continues to Remind New Jerseyans How to Report Property Tax Rebates SPRINGFIELD-To help New Jersey taxpayers understand and meet their tax responsibilities; the Internal Revenue Service today explained the reporting requirements for the Homestead and New Jersey Saver Rebate Programs. "Taxpayers that claimed itemized deductions, including all of their property taxes, on last year's federal income tax return, will need to report the rebate as income for 2005. Residents will not receive a Form 1099 from the State of New Jersey since this is not an income tax refund," said IRS Spokesperson Gregg Semanick. "Rebates of this type are called 'recoveries'," Semanick said. "A recovery is a return of an amount you deducted or took credit for in an earlier year. In this case, it is the deduction you took for your property taxes on your 2004 tax return. Taxpayers who itemized last year may have enjoyed the benefit of taking a deduction for the entire amount of their property tax payment. However, since they received part of that deduction back in the form of a property tax rebate, after they filed their return, these taxpayers will have to report that rebate on this year's return." New Jersey taxpayers can report the rebate on Line 21 of Form 1040. Line 21 is designated for reporting"Other Income" and has a space for describing the income. Taxpayers can enter "Property Tax Rebate" in the space provided on the return. Alternatively, taxpayers can offset the rebate on their 2005 property tax deduction on line 6 of Schedule A – Itemized Deductions. Line 6 is designated for reporting a deduction for“Real Estate Taxes.” Taxpayers who used the standard deduction, or who did not claim their property tax as an itemized deduction on their 2004 tax return, do not have to report the rebate as income. By not claiming an itemized deduction for property taxes, these taxpayers did not receive a special tax benefit and therefore there is no taxable recovery. The IRS suggests that taxpayers review the explanation of Other Income in their Form 1040 Instruction booklet. Taxpayers can find a more detailed explanation of Recoveries in IRS Publication 525, Taxable & Nontaxable Income, for further details on the property tax offset. Taxpayers are also encouraged to discuss their specific tax situation with the tax professional that prepares their return. Additional information on this and other tax issues as well as publications and forms can be found at the IRS [Web site](Web site www.irs.gov. Forms)[ ](Web site www.irs.gov. Forms)[www.irs.gov](Web site www.irs.gov. Forms)[. Forms](Web site www.irs.gov. Forms) and publications also can be ordered by calling 1-800-829-3676 (1-800-TAXFORM) . Taxpayers seeking further assistance on tax related matters can call the IRS toll-free customer service line at 1-800-829-1040 (1-800-TAX-1040) .

FAQs

Do I need to report the property tax rebate as income for 2005?

If you claimed itemized deductions for property taxes on your 2004 federal return, you must report the rebate as income for 2005. It is treated as a “recovery.”

Where do I report the rebate on my federal return?

You can report it on Form 1040 Line 21 in the “Other Income” description, entering “Property Tax Rebate.” Alternatively, you may offset it on Schedule A (Itemized Deductions) Line 6 for “Real Estate Taxes.”

Who does not have to report the rebate as income?

Taxpayers who used the standard deduction, or did not claim property tax as an itemized deduction in 2004, generally do not need to report the rebate as income because there is no taxable recovery.

Sep 19, 2026

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