Eds Note: It is that time of year when paper work and taxes descend upon us, and Dr. Rent helps out with a little Q&A.
This post does not have the controversial staying power that the 400 Block or University Avenue posts do. Next week I will go back to stirring the pot as it may be with my thoughts on the Wausau Area Apartment Association. They are an organization in flux. They have no clear long-term direction at the moment and I will put in my two cents about the options they have before them. However, this week’s post is important to landlords and tenants alike.RENT CERTIFICATES – TRUE or FALSE
All Renters Need Rent Certificates.
FALSE – Only those renters filing for a Homestead Credit using Schedule H or Schedule H-EZ need a rent certificate.
Because there is a place on the Wisconsin income tax return for rent payments made (as part of the school property tax credit), many believe they need a rent certificate to prove the amount they enter on this line of the tax form. Although for audit purposes, that may not be a bad idea, proof of rental payment (such as cancelled checks and receipts for cash payments) is all that would be needed if there were an audit. Nothing is required to be filed with your tax form if you are only getting the school property tax credit. What is the Homestead Credit and do you qualify for it? The Department of Revenue’s website (http://www.revenue.wi.gov) can answer that question.
Landlords Must Provide Rent Certificates
FALSE – Landlords need to fill them out for tenants that request them, but do not need to provide them.
Although some landlords do have these forms at their office, those are the exception and not the rule. Most landlords require the tenant to get a form and bring it to them. They will then fill it out for the tenant to pick up later, or mail it to the tenant. Some landlords ask for tenants to include a stamped envelope if they want them mailed back. It is not a good idea to stop by on the way to your tax appointment, as sometimes the landlord can’t just drop everything to do this. Plan ahead. If you are looking for the form, it is actually a part of the Schedule H packet.
Rent Certificates Are Available at the Post Office and Library
FALSE and TRUE – The post office normally does not have tax forms, however libraries do carry them.
As just stated, the Rent Certificate form is actually a part of the Schedule H packet. You can also download the form online from the Department of Revenue’s website (http://www.revenue.wi.gov).
No Corrections Are Allowed on Rent Certificates
TRUE – The Department of Revenue will reject a certificate that has been tampered.
The purpose of the policy was to avoid fraud; i.e. having a landlord fill out a form, then after getting the landlord’s signature, changing the numbers on the form to get a bigger credit. The problem is that like most tax forms, it is easy to make a mistake. Even if a landlord makes a mistake and then corrects it, the form is void. No “X”-ing off things and no white out. My recommendation is to double check your rental records, do all the math on a separate sheet, and THEN fill out the form. I know many of our tenants bring in two forms, just in case we mess up the first one.
Rent Certificates Have to State Amount of Rent Paid to Landlord
FALSE – The Certificate states the amount of rent paid to the landlord that came from the tenant.
You may ask, what is the difference, Dr. Rent? You are saying the same thing. Not exactly. Many people who qualify for the Homestead Credit have the rent subsidized by a public agency, such as Section 8 rental payments. In this case, if the rent is $400 per month, Section 8 pays $250 per month and the tenant pays $150 per month. On the Rent Certificate, the tenant only gets credit for the $150 they paid, NOT for payments made by other agencies.
If One Roommate Paid All the Rent, They Get All the Credit
FALSE – Unrelated adult occupants will get equal credit.
Again, this is to prevent fraud. If two adults are co-tenants, one qualifies for the Homestead Credit and one does not, it would make sense for the qualifying tenant to take full responsibility for the rent payment, regardless of who paid the rent. The form does not allow this. Each adult occupant is counted separately (unless married, they are counted as one). If John Smith and Jane Doe (unmarried adults) share an apartment, and Jane Doe really did pay 100% of the rent; on the Rent Certificate, she will only get credit for ½ of the rent.
Rent Certificates Must Claim 2006 Rent, Even if Paid in 2007
TRUE – This assumes the rent is paid BEFORE the Rent Certificate is filled out.
An example is that rent for the month of December was unpaid by the tenant. They finally paid it in mid-January. On February 1st, they give the landlord a Rent Certificate to fill out. A recent Department of Revenue opinion states that even though December’s rent was not received in 2006, it was rent paid for 2006 and should be included on the Rent Certificate. On the other hand, if that December rent was never paid, then it does not get listed.
Hopefully, this clears some things up as it pertains to rent certificates. This only just scratched the surface and in depth questions or “unique circumstances” should be discussed with a tax accountant or attorney.
I should point out that landlord-tenant questions can be emailed to me at email@example.com, and these questions may be used as future blog posts.
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