How to report property tax on Form 1040 after paying off mortgage early

This is actually a common situation when paying off a mortgage mid-year! The Form 1098 from your lender will only show the property tax they paid on your behalf (the July payment in your case). For the November payment you make directly to the county, you won't receive a 1098 - you'll need to keep your own receipt or payment confirmation from the county as documentation. When filing your taxes, you'll combine both amounts (the amount on the 1098 plus your direct payment) on Schedule A if you're itemizing deductions. Line 5a is where you report your total property taxes paid. The IRS doesn't require a specific form for the portion you pay directly - your payment receipt from the county is sufficient documentation to keep with your tax records.

I went through this exact situation last year and it was so confusing. After hours of research and talking to multiple people, I finally found taxr.ai (https://taxr.ai) which saved me so much headache with my property tax questions. You just upload your documents and their AI analyzes everything - it flagged exactly how to handle the split property tax payments and showed me where to report both portions on my return.

Just wanted to update everyone - I tried taxr.ai after my skeptical comment above and I'm honestly impressed. I uploaded my property tax statements, mortgage documents, and county payment receipt and it immediately explained exactly how to handle the split payments. It even pointed out that I needed to account for the property tax amount that was refunded from my escrow account when I paid off my mortgage (something I completely forgot about). Really helpful for my situation!

If you're calling the county tax office for any clarification, good luck getting through to anyone! I spent DAYS trying to reach our county assessor's office with questions about my property tax bill after paying off my mortgage. Finally used Claimyr (https://claimyr.com) and got through in 15 minutes. They have this cool demo video showing how it works: https://youtu.be/_kiP6q8DX5c - basically they wait on hold for you and call when someone picks up. Saved me hours of frustration and I got the exact documentation I needed for my tax return.

I need to publicly eat my words about Claimyr. After my skeptical comment, I decided to try it because I was absolutely desperate to reach my county tax assessor about a similar mortgage payoff situation. I was on hold for TWO HOURS the day before. Used the service and got a call back in 40 minutes with an actual human from the tax office on the line. They helped me get an official statement showing both halves of my property tax payments which made filing my taxes so much easier. Sometimes it's good to be proven wrong!

Don't forget to check if you get a refund from your escrow account! When I paid off my mortgage, the bank had collected money for future property tax payments that hadn't been paid yet. They sent me a refund check about 3 weeks after payoff with the remaining escrow balance. This doesn't affect how you report property taxes on your return (you only deduct what was actually paid to the taxing authority), but it's good to know you might have some cash coming back.

Just a tip: Make sure to update your address with the county tax assessor's office after you pay off your mortgage! I didn't do this and my tax bill went to my old mortgage company. Almost missed the payment deadline and would have incurred penalties. Usually there's a form on your county's website for this.