This tax season, check to see if you're eligible for a renter's credit. Claiming the renter's credit on your taxes works differently in each state. And not everyone is eligible.
A renter's tax credit allows taxpayers who rent their homes to receive a credit on their annual tax return, based on your total rent payment. And it only applies if you rent your primary residence.
Claiming this renter's credit on your taxes can put cash back into the household budget. The money you receive from the renter's tax credit can help offset rising housing costs and other expenses. Some households use it to pay down debt or start a savings account. Others use it to pay utility bills, buy food or cover the rent.
This tax relief comes in the nick of time for many Americans. Many renters still face the threat of eviction because they've fallen behind on the rent. Thousands of U.S. households (especially households with children) still don't have enough to eat.
If you're worried about eviction, the renter's tax credit might be too small to pay off all of your back rent. And it may not arrive in time. So, apply for additional eviction prevention resources while you wait.
Whether or not you qualify for a renter's tax credit depends on where you live, your income, your age and your disability. Often, eligibility depends on all four factors.
Not every state offers a rental credit on your taxes. Contact your state's department of revenue or consult the list below to see if your state allows this credit.
Most states that offer a renter's credit on your taxes have income thresholds in place. The details are in the state descriptions below.
Several states also offer renter's tax credits to older tenants or to disabled renters. The state-by-state parameters are also listed here.
Each state's eligibility requirements are different. And the programs may change over time. So, be sure to double-check your state's website before filing your tax return or with your own tax expert in your area. Most online tax preparation options will also help you learn if you're eligible to receive the renter's credit on your taxes.
Taking a renter's credit on your taxes is different than claiming a portion of your monthly rent on your tax return. You can only deduct a portion of your rent if you run a workshop or business from your apartment, condo or rental home. And only the exact square footage that you use as a dedicated office or workspace is eligible for a deduction.
There are very specific requirements for claiming a home office or workshop on your taxes. Renters who work from home can possibly deduct certain expenses, as well. Study the rules carefully. Then, talk to your own tax preparer to make sure you're filing your tax return properly.
The way you claim a renter's credit your taxes varies from state to state. The renters who are eligible to receive this tax deduction are different, too. But a few requirements are consistent no matter where you live.
If any of these do not apply to you, then you are automatically ineligible to receive the tax credit.
Several U.S. states offer a renter's tax credit to senior citizens or renters of any age who have a disability. The age to qualify as a senior citizen can vary, so check your state to see if you're eligible.
The states that offer renter's tax credits for older and/or disabled tenants include:
Other states offer a renter's tax credit that's determined by income. These states let you claim this credit if your rent is above a certain percentage of your total income. It's a small step toward making housing more affordable for financially burdened households.
Here are the states that offer a renter's tax credit for based on income:
If you've lived in California for at least half of the year, you're potentially eligible for a renter's tax credit when you file your taxes. Single filers who earn $43,533 or less annually receive a $60 credit. Married couples, heads of households and qualified widows and widowers who earn $87,066 or less receive a $120 credit.
Tenants in Hawaii who pay at least $1,000 in rent and make less than $30,000 a year can receive a $50 tax credit. Renters don't need to claim an income to get the credit, but they have to reside in Hawaii.
Renters in Maine receive a property tax fairness credit. It's determined by income level and household size. Search by tax filing year to see if you're eligible and learn what your credit will be.
Renters' Tax Credit Applications for 2022 will be available for Maryland tenants on Feb. 15, 2022, and you can file online. To see if you're eligible, first find your gross household income on the chart in Column A. If it exceeds the number in Column B, you qualify for a tax credit of as much as $1,000.
The state of Massachusetts allows renters to deduct 50 percent of the rent they paid during the year. The maximum deduction is $3,000. If two or more people rent a unit together, each tenant can receive a renter's tax credit based on the amount of rent they paid.
Michigan renters can earn a Homestead Property Tax Credit. The difference between the property taxes you pay and your household resources determines the amount of the renter's tax income credit. The entire household's taxable and nontaxable income determines the refund amount. Use the Renter's Checklist to see if you qualify.
If you live in Minnesota for at least 183 days, you can claim a renter's credit on your taxes. To qualify, your household income must fall below a certain threshold. (For example, it was $62,960 in 2020). You'll need to get a Certificate of Rent Paid (CRP) from your landlord or property owner to get the credit. You also have to provide the CRP when you file your return. You can file using online tax preparation software or a paper return.
New Jersey gives renters options. Tenants can get a deduction of 18 percent of rent paid, up to $15,000. This option reduces taxable income. Or, you can get a flat $50 renter's credit on your tax return. This option subtracts the credit from the total taxes you pay. You can only choose one. Your household gross income must be more than $20,000 (or $10,000 if you're single or married and filing separate returns).
Low-income taxpayers with very inexpensive leases can benefit from a renter's tax credit in New York. To qualify, you need to have a household gross income of $18,000 or less. Your average monthly rent also can't exceed $450. If you're under 65, the credit is $75. But if one member of your household is over 65, the credit increases to a maximum of $375.
Utah takes the death of a spouse seriously. The state offers a renter's tax credit to widows and widowers of any age. Recipients must reside in Utah for the whole calendar year. Apply using a paper return or the via Tax Access Point online.
The Renter Rebate Program refunds between 2 and 5 percent of previously paid rent to tenants in Vermont. This program is available for renters who make $47,000 or less per year. To qualify, you need to live in Vermont for a full calendar year, between Jan. 1 and Dec. 31. You can't claim any money paid directly to your landlord as part of the Coronavirus Relief Fund as rent paid.
Washington, D.C., households with a total income of $20,000 or less might be eligible for a renter's credit. It can reduce a renter's income tax liability by up to $750. To apply for the credit, file a Schedule H (Property Tax Credit Form), along with Form D-40 (Individual Income Tax Return).
The state of Wisconsin offers The Homestead Credit to renters with low or moderate incomes. (At press time, that meant tenants with a household income of less than $24,680.) You don't necessarily need to file income taxes in the state to qualify, but you do need to be at least 18 years old. You also need to legally reside in Wisconsin for the entire calendar year.
The majority of states that offer renter's tax credits have very specific income parameters. That's because these programs help ease the financial burden of low-income households.
Indiana is the exception. It offers a broader renter's tax credit for tenants. As long as your building is your primary residence, located in Indiana and subject to property tax, you can deduct up to $3,000. Unlike other states, Indiana's renter's tax credit is available to any tenant who meets these criteria.
Claiming a renter's credit on your taxes is your choice. It can take time and money to apply. You might have to spend a little more time proving that you're eligible for the credit. Your taxes could be a bit more complicated to prepare. You could decide to pay a professional to handle your taxes, just for the extra peace of mind.
But the money you get back can really add up — and offset any tax preparation costs. And since you can apply using a paper return or major tax preparation software, it's not usually a complicated process. Claiming a renter's tax credit is probably worth it for most renters.