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MO State Property Tax Credit with SSDI Backpay

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carnon

New member
Hello. I received my SSDI backpay throughout tax year 2018-however it was for the year 2017. If the income is apportioned properly to 2017 and 2018, then I am eligible for the full property tax credit in MO for both years. However, when I filed for the property tax credit for tax year 2018, I did not receive the full credit. Do I need to file/amend my 2017 return/property tax credit to account for the backpay that was received in 2018, but really for 2017, and file/amend for 2018 (and property tax credit) with only the 2018 income received? If there isn't a way to do this, I'd like to know that as well. Thank you in advance!
 


Taxing Matters

Overtaxed Member
Although the SSDI back pay may represent benefits due for months in prior years, for income tax purposes it is considered income for the year in which it was actually paid to you, not the periods that the benefits were for. The same is true for other income you have too. For example, if you get a back pay award this year from an employer for work done in 2017, that is income for 2019, the year you actually received it, not 2017. While I am not familiar with the details of the MO property tax credit, a quick look at it suggests to me that MO will treat it the same way — it is all income to you in the year received. It does not matter what months the benefits were for.
 

FlyingRon

Senior Member
Looking through the Missouri guidance, TM is correct that it counts in the year it was paid to you. However, if you were otherwise eligible for past years, you can go back and apply for the credit for the three prior years.
 

carnon

New member
My income is extremely low, but I had previously read that if someone receives a large backpay amount (an amount that may otherwise be subject to taxes in the year received) then they are able to apportionate properly to the years in which it should have been received. That would be for income tax purposes...Is there no way to do this for a property tax credit purpose? I would think if I were able to file income taxes and amend etc. for 2017 then I would show my income as a bit higher (but still well within the full property tax credit range) on my Federal and Missouri income tax returns (and fill out the property tax form showing slightly higher income). Therefore, I would do the same for 2018 also. I just find it hard to believe/digest that this option for properly attributing SSDI backpay can only be for those getting relatively large SSDI back payments and who may also have other forms of income, while leaving people who barely have enough to subsist unable to receive a full property tax credit. Thank you for the responses so far!
 

Taxing Matters

Overtaxed Member
My income is extremely low, but I had previously read that if someone receives a large backpay amount (an amount that may otherwise be subject to taxes in the year received) then they are able to apportionate properly to the years in which it should have been received. That would be for income tax purposes
I don't know what you read so I cannot comment on that. There once was a concept for federal income tax called income averaging that allowed you to spread out a large income in one year over several years but that is long gone. The current state of the law is that for cash method taxpayers (which includes pretty much all individuals) you account for most income in the year you actually get it, regardless of the year that it was originally due to you.
 

davew9128

Junior Member
I don't know what you read so I cannot comment on that. There once was a concept for federal income tax called income averaging that allowed you to spread out a large income in one year over several years but that is long gone. The current state of the law is that for cash method taxpayers (which includes pretty much all individuals) you account for most income in the year you actually get it, regardless of the year that it was originally due to you.
There is an election wherein a taxpayer receiving lump sum SS benefits for prior years may calculate the taxable amount of those benefits based on what it would have been if received in the years the benefits are being paid for. https://www.irs.gov/faqs/social-security-income/back-payments/back-payments
 

Taxing Matters

Overtaxed Member
There is an election wherein a taxpayer receiving lump sum SS benefits for prior years may calculate the taxable amount of those benefits based on what it would have been if received in the years the benefits are being paid for. https://www.irs.gov/faqs/social-security-income/back-payments/back-payments
That's true, but the income is still reported in the year that the income was received. Using that election might reduce the taxable benefits for the current year, though, and might help the OP qualify for the state property tax benefit, so I'm glad you pointed it out. I hadn't thought of that possibility.
 
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