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Line A1 School Property Account Number (SPAN): This is a unique identification number assigned by the town. Enter the 11-digit number printed on your property tax bill located in the Housesite information. Be sure to verify your SPAN as your property tax credit is credited to the property tax bill for the SPAN entered on this form. Line A2 Business Use of Dwelling: If there is no business use or the business use is 25% or less - enter 00.00%.
If more than 25% business use - enter the percentage. Generally, the business use percentage is the same as reported on your Federal income tax return. Examples for calculating business use (a) 1,800 square foot home with 635 square feet used as a home office and inventory storage. The 35.28% is business use (635/1,800) is rounded to 35.00%. The portion used for business is taxed at the nonhomestead rate. (b) 1,200 square foot home with 250 square feet used as a home office. The 20.83% business use (250/1,200) is rounded to 21%. Because this is less than 25%, enter 00.00%. Line A3 Rental Use of Dwelling: Enter the percentage of your home that you rent to another person. There is no 25% allowance for rentals. All rental use must be reported. The rental use percentage is generally the same percentage as reported on your Federal income tax return. Example for calculating rental use is: 1,800 square foot home with 365 square feet rented. The 20.27% rental use (365/1,800 is rounded to 20.00%. Eighty percent of your home will be taxed at the resident rate. Line A4 Business or Rental Use of Improvements and Other Buildings on the Property: Check the "No" box if there are no other improvements or other buildings on your parcel other than your home or garage. Check the "Yes" box if an improvement or building is used for business or rented. Examples: garage is used to do auto repair, buildings used for farming, there is a second dwelling on the property rented out, a building used for retail or wholesale business. Lines A4 - A7 Special Situations: Check the box if one of these situations applies.
Trust Ownership A dwelling owned by a trust is not the homestead of the beneficiary unless
The claimant is the sole beneficiary of the trust and:
1. The claimant or the claimant's spouse was the grantor of the trust, and the trust is revocable or became irrevocable solely by reason of the grantor's death;or
2. The claimant is the parent, grandparent, child, grandchild or sibling of the grantor, the claimant is mentally disabled or severely physically disabled, and the grantor's modified adjusted gross income is included in the household income calculation.
List all child support payments received in the calendar year as well as all cash gifts. Cash gifts include any and all cash received by you or other houshold members, as well as cash equivalent. Cash equivalents include gifted stocks, bonds, treasury obligations, certificates of deposit or other instrument convertible to cash. The first $6,500 of cash gifts to the household is exempt from household income. Line i-j HOUSEHOLD INCOME - Business income & taxable and non taxable capital gains. If the amount is a loss enter zero If there is a business loss, enter zero (0). For taxpayers filing Married Filing Jointly, where both spouses have business income or loss from sole proprietorships, enter the amount from Federal return 1040, or enter zero (0) if negative, in the Claimant column.
Report nontaxable capital gains from sale of home and gains from Federal return 1040 Schedule D: a capital loss carryforward cannot offset a current year capital gain. Add back 1040 Schedule D Lines 6 and 14 to Line 16. This cannot be less than zero.
For purposes of household income, a capital loss carryforward cannot offset a current year capital gain.
Exception: A business loss may offset a capital gain on the sale of the business' property provided
(1) the loss and capital gain are for the same business; and
(2) the Internal Revenue Service requires the capital gain to be reported; and
(3) the business loss and capital gain from the sale of the business' property both occurred in the same tax year.
If the offset of the capital gain by the loss creates a negative amount, enter zero (0).
A capital loss cannot offset business income.
If netting a loss creates negative capital gain, enter 0. Line k HOUSEHOLD INCOME - Taxable pensions, annuities, retirement fund distributions Enter the income from retirement plans, deferred compensation plans and annuities as reported on Federal Form 1040. Household income includes nonqualified distributions from retirement and deferred compensation plans and both taxable and nontaxable federal pension and annuity benefits. Line l HOUSEHOLD INCOME - Rental and royalty income Enter the income from each rental property you own as reported on Federal Schedule E, Part I. Each rental property stands on its own. A loss generated by one property may not be used to reduce income from a different property. See Technical Bulletin #56 for the proper treatment of rental income and losses. Room and board payments made to you by member(s) of the household is rental income and must be reported on this line. Royalty income - Report income from Federal Form 1099-MISC, 1099-S, K-1 or Schedule E. Line m HOUSEHOLD INCOME - Farm/partnership/S corporations/LLC/estate or Trust income Federal Schedule K-1 pass-through income as required to be reported on Federal Form 1040, Schedules E and/or F. Report ordinary business income, rental income and guaranteed payments from K-1 on this line. The loss from one K-1 cannot offset income from another K-1. A loss is reported as zero. See Line L instructions for the only provision allowing netting of a business loss. Line n HOUSEHOLD INCOME - other Income Sources of other income include, but are not limited to, prizes and awards, gambling or lottery winnings, director's fees, employer allowances, taxable refunds from Federal Form 1040, allowances received by dependents of armed service personnel and military subsistence payments (BAH, FSA), loss of time insurance, cost of living adjustment paid to federal employees, and other gains from Federal Form 1040. Report on this line income reported to you by Federal Form 1099-MISC or W-2G. Cancellation of debt is no longer reportable as other income on the household income schedule. Line p HOUSEHOLD INCOME ADJUSTMENT - Social Security and Medicare Tax Withheld and Self-Employment Tax on Income Reported
NOTE: The deduction is for taxes only. Medicare premiums withheld from Social Security payments are not an allowable adjustment.
BOTH OWNERS OCCUPY THE BUILDING AS THEIR PRINCIPAL RESIDENCE, the eligible housesite education property tax is the tax on the portion owned by each homeowner. If the town issues a property tax bill to each homeowner for his or her portion of the homestead, use the housesite value, housesite property tax and 100% ownership interest. If the property tax bill is for the total property, prorate the housesite value and housesite property tax.
BOTH OWNERS DO NOT OCCUPY THE DUPLEX AS THEIR PRINCIPAL RESIDENCE, the owner occupying the duplex as his or her principal residence must prorate for the other owner's interest.
Entity Ownership When an entity such as a C or S corporation, partnership or limited liability company owns the property, the property cannot be claimed as an individual's homestead. There is an exception for entity ownership of a farm. See Reg. 1.5401.
Life Estate A person who holds a life estate interest in a property that he or she occupies as a principal home must declare the property as a homestead. Check Box A8 of Form HS-122. A life estate is an interest in the property conveyed through a deed and recorded in the town records. The deed does not have to be attached to Form HS-122 but must be available for review upon Department request.
Property owned by dead spouse A homestead declaration can be filed if the property is owned by the estate of a dead spouse and it is reasonably likely that the dwelling will pass to the widow or widower by law or valid will when the estate is settled.
Shared Ownership of the Housesite When a housesite is owned by someone other than the Homeowner and member(s) of the household, the eligible property tax or housesite value is the percentage owned by the household members. Examples: (1) James, Grace and Lucinda jointly own a home and all live in the home. Lucinda is the Homeowner. She declares the property as her homestead. She enters the amount found on the property tax bill for the housesite value, the housesite property taxes and enters 100% ownership interest on as all owners live in the home; (2) Tim and Dan own a home. Tim lives in the home. Dan does not. Tim is the Homeowner. He declares the property as his homestead. He enters the amount found on the property tax bill for the housesite value, the housesite property tax and enters 50% ownership interest to adjust for ownership interest of Dan who does not live in the household.
Trust Ownership A dwelling owned by a trust is not the homestead of the beneficiary unless
The claimant is the sole beneficiary of the trust and:
1. The claimant or the claimant's spouse was the grantor of the trust, and the trust is revocable or became irrevocable solely by reason of the grantor's death;or
2. The claimant is the parent, grandparent, child, grandchild or sibling of the grantor, the claimant is mentally disabled or severely physically disabled, and the grantor's modified adjusted gross income is included in the household income calculation.
The term. "sole beneficiary" is satisfied if the homeowner and the spouse/civil union partner are the only beneficiaries of the trust. A property owned by an irrevocable trust cannot be a homestead except as stated in (1) above. The trust document does not have to be attached to the Property Tax Credit Claim but must be available for review upon Department request.