Platinum Professional Services Course: 2026 Free IRS Tax Course
Book: The Income Tax Return Reading Assignment
Printed by: Charleah Munson
Date: Tuesday, May 20, 2025, 10:09 PM
Table of Contents
Introduction to the Personal Income Tax Return
Who Must File
Getting Started with the Tax Return
Amending a Tax Return
When are Personal Tax Returns Due?
Accounting Methods and Periods
Other Various Forms of Taxes
Estimated Tax Payments
Tax Penalties
Getting Started: Tax Filing Status
Who is Considered a Dependent
Multiple Support Agreements
Introduction to the Personal Income Tax Return
The Tax Cuts and Jobs Act (TCJA):
Signed into law by President Donald Trump on December 22nd, 2017.
Most comprehensive tax reform since 1986.
Includes changes to individual and corporate tax law.
Most changes are temporary and set to expire in 2025.
2024 inflationary adjustments will be covered later in the course.
The 2020 Further Consolidated Appropriations Act:
Passed by Congress on December 20th, 2019.
Funds government spending for 2020.
Estimated $426 billion in tax cuts for individuals and businesses.
Retroactively extends expired provisions from the end of the 2017 tax year.
Revises tax law for the 2019 tax year.
Enacts provisions for future tax years.
Quiz and exam questions will be based on course reading assignments, not external links.
Tax Publication 17:
IRS's comprehensive tax guide for personal tax returns.
Not required for this course but useful for additional information.
Can be saved to a computer or printed (over 300 pages).
Easy to locate specific topics via the index pages.
IRS search page for forms and publications: http://www.irs.gov/formspubs/index.html
The U.S. income tax system:
Imposes a tax based on income on individuals, corporations, estates, and trusts.
The Internal Revenue Service (IRS):
Collects and enforces federal tax laws.
Federal government agency, a bureau of the U.S. Department of the Treasury.
Under the direction of the Commissioner of Internal Revenue.
Responsible for collecting taxes and administering the Internal Revenue Code.
The Internal Revenue Code (IRC)
Federal tax laws reside in the Internal Revenue Code (IRC).
Domestic portion of federal statutory tax law in the United States.
Published in volumes of the United States Statutes at Large and Title 26 of the United States Code (USC).
Organized topically into subtitles and sections, covering:
Income tax
Payroll taxes
Estate taxes
Gift taxes
Excise taxes
Procedure and administration of the IRS
U.S. personal income tax:
Based on taxable income times a specified tax rate.
The tax rate is determined by the individual's total taxable income; higher taxable income results in a higher tax rate.
Graduated tax rates: an individual with a taxable income of 15,000 may be taxed at a rate of 15%, while an individual with a taxable income of 75,000 may be taxed at a rate of 25%.
Graduated tax: a tax that rises in steps, with those reporting the highest taxable income paying the highest percentage of tax.
Form 1040 and related schedules and forms determine total taxable income, tax liability, deductions, and potential tax credit offsets.
First income tax was assessed in 1862 to raise funds for the American Civil War, with a rate of 3%.
1862: President Lincoln and Congress created the position of Commissioner of Internal Revenue and enacted an income tax to pay war expenses.
The tax was assessed to Union States and repealed 10 years later.
1894: Congress revived the income tax, but the Supreme Court ruled it unconstitutional the following year.
16th Amendment:
Ratified in 1913.
Gave Congress the authority to enact an income tax.
1913: The first Form 1040 appeared after Congress levied a 1% tax on net personal incomes above 3,000 with a 6% surtax on incomes of more than 500,000. The top income tax rate rose to 77\%$ during World War I to help finance the war effort. It dropped sharply in the post-war years, down to 24% in 1929, and rose again during the Depression.
During World War II, Congress introduced payroll withholding and quarterly tax payments.
Individual Income Tax Return: Form 1040
Prior to the 2019 tax season, there were two simpler versions of Form 1040 that some individuals may have been qualified to use, Form 1040EZ and Form 1040A.
Streamlined into a shorter, simpler Form 1040 as of the 2019 tax season.
Replaces the previous Form 1040 used in 2017 as well as Form 1040A and Form 1040EZ.
Consolidated the three versions of the 1040 into one simple form so that all 150 million taxpayers could use the same form.
Uses a “building block” approach, supplemented with additional schedules if needed.
Taxpayers with straightforward tax situations would only need to file this new 1040 with no additional schedules.
Wages, salaries, tips, pensions, annuities, social security benefits, and the Earned Income Credit are entered directly on Form 1040.
Less common items are entered into a set of schedules and totals are then entered on Form 1040.
Form 1040 and Schedule Revisions for the 2024 Tax Year
The IRS made the decision to further revise Form 1040 and its new set of schedules for the 2020 tax season.
Shortened the six schedules used in the 2019 tax season into only three schedules.
Moved a few of the line items back to Form 1040 and consolidated the line items on the schedules.
The numbering system for the line numbers on the 2018 schedules corresponded to the numbering system of Form 1040.
The line numbers on the new schedules use a separate numbering system than Form 1040's line numbers.
Form 1040 has also changed:
Reporting and calculations of taxable income have been moved back to the bottom of the first page on the 2019 Form 1040.
Tax credits and the calculation of tax owed are now on page two.
Identifying information for spouses and dependents is now at the top of the first page, where it was in years before 2018.
IRA distributions, now have their own line on page one, while on the 2018 Form 1040 they were lumped together with pensions and annuities.
For tax year 2020 more changes were made to Form 1040.
On the front page of Form 1040 under the taxpayer's information, a question has been added in reporting cryptocurrency as the IRS has decided that virtual currency is considered investment property.
For taxpayers taking the standard deduction, the IRS added line 10b to report charitable cash contributions up to 300 that will be treated as above-the-line deductions.
The IRS simplified withholding reconciliations by separating withholdings into three lines; line 25a - Withholdings from Form W-2, line 25b - Withholdings from Form 1099, and line 25c - Withholdings from other forms.
The IRS added line 30, Recovery Rebate Credit (a refundable credit) for taxpayers who did not receive their stimulus payment or were entitled to a larger payment. Reconciliation of stimulus payments will be completed on a worksheet contained in the 1040 form.
Under Line 37 a note has been added that refers to the Cares Act, where employers can defer deposits and payment of the employer's share of social security tax that would otherwise be required to be made between March 27, 2020 and December 31, 2020. This deferred amount will be reported in the Payment section of Form 1040 Schedule 3, Line 12e as a "deferral for certain Schedule H and SE filers."
For tax year 2021 additonal changes are being made to Form 1040.
Line 19 "nonrefundable" was added in front of the Child Tax Credit or Credit for Other Dependents line and "refundable" was added to line 28 in front of the Child Tax Credit or Additional Child tax Credit line.
The Build Back Better Act continued to make the Child Tax Credit is fully refundable for the 2021 tax year.
For the tax year 2022, there are minor changes made to Form 1040.
Expanding line 1 Wages, Salaries, tips, etc to separate different types of income such as Household Employee Wages not reported on Form W-2, Wages from Form 8989 and Taxable Dependent Care Benefits from Form 2441.
Some other changes include removing the recovery rebate credit and the charitable contributions deduction when taking the standard deduction.
For tax year 2023, there were no changes made to Form 1040.
For tax year 2024, there was a change to Schedule 2 to include for example, Excess advanced tax credit repayments and repayment of new clean vehicle credit(s) from Schedule A.
Schedules
Schedule 1, Additional Income and Adjustments to Income:
Business income, alimony received, adjustments to gross income, educator expenses, and student loan interest expense.
Schedule 2, Additional Taxes:
Alternative Minimum Tax, excess Premium Tax Credit repayment, self-employment tax, unreported Social Security and Medicare tax, household employment taxes, and Net Investment Income tax.
Schedule 3, Additional Credits and Payments:
Foreign Tax Credit, Credit for Child and Dependent Child Care, Education Credit, and Residential Energy Credit. Also includes estimated tax payments, Net Premium Tax Credit, and amounts paid with an extension request.
Form 1040-SR, Tax Return for Seniors:
Designed for seniors 65 years and older.
Uses a bigger font and eliminates shading in boxes to improve readability.
Includes a chart to help senior taxpayers calculate their standard deduction.
For married couples filing jointly, only one of the spouses needs to meet the age requirement.
Who Must File
Filing Requirements for Individuals:
Depend on gross income, filing status, age, and blindness.
Prior to the Tax Cuts and Jobs Act (TCJA), the IRS allowed every taxpayer to take two deductions from their income prior to calculating their income tax, the standard deduction and the personal and dependent exemption.
Under TCJA, the personal and dependent exemption has been eliminated for tax years 2018 through 2025, and the standard deduction has been increased to compensate for the lost exemption.
For the 2024 tax year, because there will be no personal exemption amounts, the following are the general rules for figuring whether a taxpayer who is not a dependent will need to file a return in 2025 for the 2024 tax year.
Individual taxpayers who are not over 65 and blind, will be required to file a tax return if their gross income for the taxable year is more than the standard deduction for their filing status.
Married taxpayers that are both under 65 and not blind, will be required to file a tax return if their gross income, when combined with their spouse’s gross income, is more than the standard deduction for a joint return.
Taxpayers who are 65 and older and/or blind have larger standard deduction amounts than the regular taxpayer and will have a higher minimum filing requirement.
See PowerPoint Table 1-1 for a detailed listing of minimum filing requirements for individuals.
Filing Requirements for Dependents:
Whether a dependent must file a return also depends on four factors; gross income, filing status, age, and blindness.
See PowerPoint Table 1-2 for a detailed listing of minimum filing requirements for dependents.
Earned income includes salaries, wages, tips, professional fees, taxable scholarships, and fellowship grants.
Unearned income includes unemployment compensation, taxable Social Security benefits, taxable pensions, annuity income, canceled debt, unearned income from a trust, taxable interest, dividends, and capital gains.
Situations When Individuals and Dependents Must File a Return
Taxpayer had self-employment earnings of at least 400.00
Taxpayer had wages of 108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes
Taxpayer is owed a refund from taxes paid
Taxpayer is eligible for a refundable credit i.e. Earned Income Credit, Child Tax Credit
Taxpayer had unemployment income
Taxpayer owes household employment taxes
Taxpayer received distributions from an MSA or Health Savings Account
Taxpayers may want to file even if they do not meet the minimum income requirements:
If they had taxes withheld from their pay and are owed a tax refund.
If they qualify, they must file a return to receive the refundable Earned Income Tax Credit.
If they are claiming education credits, they must file to be refunded the refundable portion of the American Opportunity Credit.
If they have a qualifying child but owe no tax, they can file to be refunded the Additional Child Tax Credit.
If they qualify, they must file to claim the refundable Health Coverage Tax Credit.
If they adopted a qualifying child, they must file to claim the Adoption Tax Credit.
If they overpaid estimated tax or applied a prior year overpayment to this year, they must file to receive the refund.
See PowerPoint Table 1-3 for a complete list of the situations where one must file a return regardless of taxable income.
Determining Residency for Tax Purposes
The term “alien” refers to an individual who is not a U.S. citizen.
A U.S. citizen for tax purposes is defined as one who:
Was born in the United States
Was born outside of the United States with at least one (1) parent who is a US Citizen
A naturalized citizen who has obtained citizenship in the U.S
United State citizens or resident aliens living abroad must file a tax return.
Aliens who do not meet the above qualifications are further divided into three statuses, resident aliens, nonresident aliens, and dual-status aliens.
Resident aliens are generally taxed on their worldwide income just like United State citizens
Nonresident aliens are taxed only on their income from sources within the United States
Dual-status aliens are individuals who are residents of the United States for part of the year, and non-residents for another part of the year. Different rules apply for the part of the year they are a United States resident and the part of the year they are a nonresident
Tax Residency Tests
Green Card Test
A green card is a permit allowing a foreigner to live and work permanently in the US without granting them citizenship.
Once an alien is issued their alien registration card or “green card" and has spent at least one day in the United States they are considered a resident regardless of whether they meet the "Substantial Presence Test" or not.
Substantial Presence Test
An alien taxpayer without a green card must meet the “Substantial Presence Test” to be considered a resident for tax purposes.
To meet this test they must be physically present in the United States for at least:
31 days during the current tax year
183 days during the three-year period, which includes the current year and the two years immediately preceding the current year
Exceptions are made for individuals who do not meet the above tests, for more information see the Instructions to Form 1040-NR.
Nonresident alien students and scholars and alien employees of foreign governments and international organizations who, at the time of their arrival in the United States, intend to reside in the United States for longer than 1 year are subject to 30 percent taxation on their capital gains during any tax year if during such tax year (usually calendar year) they are present in the United States for 183 days or more, unless a tax treaty provides for a lesser rate of taxation.
Form 1040 for Non-Residents (1040-NR):
Taxpayers who are not residents of the United States are required to file Form 1040-NR, the IRS version of Form 1040 for non-residents.
The 1040-NR format follows the same format as Form 1040 and uses Schedules 1 through 3.
Getting Started with the Tax Return
The first name listed on Form 1040 is the taxpayer; the second name is the spouse (if applicable).
The spouse isn't considered the taxpayer’s dependent.
Both are jointly liable for the contents of the entire tax return.
The taxpayer's Social Security number (SSN) is entered in the space provided.
Check that the name and SSN match what is entered on any W-2s and 1099s.
Corrections to Form W-2 or 1099 must be made by the employer or the form-issuing agent.
Under the taxpayer information mark whether the taxpayer at any time during the year the taxpayer received, sold, sent exchanged or other wise acquire any financial interest in any virtual currency.
Following this section is the Standard Deduction section which asks if someone can claim the taxpayer as a dependent or their spouse as a dependent and/or whether the spouse itemizes on a separate return or the taxpayer has dual-status alien.
The dependents section of Form 1040 lets the IRS know how many people depend on the taxpayer for support.
The term dependent can refer to either a qualifying child or a qualifying relative.
All dependents listed on the return, regardless of age, must also have an SSN (exceptions are listed below).
Form SS-5, Application for a Social Security Card, is filed with the local SSA office in order to obtain a SSN for an individual.
Exceptions to SSNs:
Death of Child:
If a child was born and died during the tax year and did not have an SSN, enter “DIED” in column (2) of line 6c (Form 1040 ) and attach a copy of the child's birth certificate, death certificate, or hospital records to the return.
Adoption of a Child:
If a taxpayer is in the process of adopting a child who is a U.S. citizen or resident and cannot get an SSN for the child until the adoption is final, then an ATIN (Adoption Tax Identification Number) can be obtained instead of an SSN.
Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions, is filed with the IRS in order to obtain an ATIN.
Those Who are not Eligible for a SSN
The IRS will issue an Individual Tax Identification Number (ITIN) if an individual listed on the tax return is a nonresident or resident alien (alien spouse or dependent included) and the individual does not have and is not eligible to get an SSN.
In order to obtain an ITIN, Form W-7 is filed with the IRS. The ITIN is then used in lieu of the SSN on the tax return wherever an SSN is requested.
ITINs that have not been used at least once within the last three years will expire and the taxpayer will be required to apply for a new one.
The IRS also routinely discontinues older ITINs even if they are currently being used to file tax returns.
The Tax Cuts and Jobs Act bill had a goal of helping to simplify the tax code. Although taxpayers will not be able to claim an exemption for dependents, it will still be relevant for the taxpayer to list dependents on their tax return.
Assembly of a Tax Return
Tax returns are assembled with the appropriate Form 1040 in front, then all schedules and forms behind Form 1040 in the numerical order of the attachment sequence number located on the top right-hand corner of the schedule or form.
Supporting statements are arranged at the end of the return behind all of the schedules and forms corresponding to the order of the schedule or form that they support.
Any correspondence or other items are not attached to the filed return unless the taxpayer is instructed by the IRS to do so.
Before submitting the return to the IRS the taxpayer (and spouse for a married joint return) will sign and date the return.
If a paid tax preparer helped with preparing the return then he or she must fill out the paid preparer section at the end of Form 1040.
The taxpayer (and spouse, if applicable) is ultimately responsible for the accuracy of the return filed, regardless of whether or not a paid preparer is used to complete a tax return.
Amending a Tax Return
Only one IRS Form 1040 tax return is filed for the tax year.
If the taxpayer must correct an error or update the originally filed return, then an additional form, IRS 1040-X, Amended Individual Income Tax Return will be filed.
IRS Form 1040-X will allow the taxpayer to make corrections and update information to a previously filed 1040 return. The taxpayer does not need to include the corrected IRS Form 1040.
There is no limit to the number of Form 1040-X returns that can be filed.
Taxpayers are able to file their IRS Form 1040-X electronically or by mail.
Taxpayers have until the later of three years from the date of the original deadline of the tax return or two years from the date the tax was actually paid to claim a refund of overpaid taxes from the IRS.
Use IRS Form 1040-X to do the following:
Correct errors made on the filed tax IRS Form 1040 including failing to report taxable income, using an incorrect filing status for one's situation and correcting, adding or removing any credits or deductions
Make certain elections after the prescribed deadline
Change amounts previously adjusted by the IRS. However, do not include any interest or penalties on IRS Form 1040-X; they will be adjusted accordingly
Make a claim for a carryback due to a loss or unused credit. However, a taxpayer may be able to use IRS Form 1045, Application for Tentative Refund, instead of IRS Form 1040-X
To request an additional refund after filing IRS Form 8379.
A separate IRS Form 1040-X will be filed for each year being amended.
IRS Form 1040-X should not be filed if one is requesting a refund of penalties and interest or an addition to tax that has already been paid. Instead, IRS Form 843, Claim for Refund and Request for Abatement will be filed.
In addition, IRS Form 1040-X should not be filed to request a refund of one's share of a joint overpayment that was offset against a past-due obligation of their spouse. Instead, IRS Form 8379, Injured Spouse Allocation will be filed.
Amending from Married Filing Jointly to Married Filing Separately
Generally, a married filing jointly return cannot be changed to married filing separately after the return's due date.
Superseded Tax Return
A superseded tax return is a tax return that is filed within the filing period though filed subsequent to an originally filed tax return.
For example, an amended Form 1040-X or corrected duplicate tax return led on or before the due date (or postmarked by then) is a superseding return.
An electronic checkbox has been added for Forms 1040/1040-SR, 1040-NR and 1040-SS/1040-PR so that taxpayers can check off if a superseded tax return is being filed.
When are Personal Tax Returns Due?
April 15th of each year is the due date for filing the federal individual income tax return if the taxpayer is a calendar year filer whose tax year ends on December 31st.
The taxpayer may file their return either by E-file (electronic filing) or by mail.
They may use either IRS Free File depending on their gross income
use a free return tax return preparation site such as the IRS Volunteer Income Tax assistance (VITA) and the Tax Counseling for the Elderly program
use a commercial software or hire a tax preparer that has been accepted to be an authorized IRS E-file provider.
If the taxpayer chooses by mail, the return is considered filed timely if the envelope is properly addressed (based by state/U.S. territory/protectorate the taxpayer resides in) and whether no payment is attached or whether a payment is attached. The envelope must be postmarked no later than April 15th.
If an individual uses a fiscal year (which is a year ending on the last day of any month other than December), the return is due on or before the 15th day of the fourth month after the close of the taxpayer's fiscal year.
If the due date falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next business day. Emancipation Day is a holiday in Washington, D.C. that is observed on the weekday closest to April 16.
For 2024 tax returns due in 2025 the deadline for calendar year filers will be Tuesday, April 15th, 2025.
Taxpayers do not have to pay if the balance due is less than 1 dollar.
If the taxpayer has a balance due more than 1 dollar they can include a check with their return.
If the taxpayer is E- filing they can schedule their payment for withdrawal from their checking account or by using IRS Direct Pay. For the taxpayer who has a refund due, this can be directly deposited into the taxpayers bank account or by receiving a check.
Tax Filing Extensions:
A taxpayer is allowed two extra months (generally, until June 15th) to file their return and pay any tax due without requesting an extension if they are a U.S. citizen or resident alien and on the regular due date of their return, they are either:
Living outside of the United States and Puerto Rico, and their main place of business or post of duty is outside of the United States and Puerto Rico
Are in military or naval service on duty outside of the United States and Puerto Rico
Note that fiscal year filers must file a paper
If they served or are serving in a combat zone, a contingency operation, or become hospitalized resulting from an injury received while serving in such an area or operation, they may have additional time to file their tax return. An individual has at least 180 days after they leave the designated combat zone/contingency operation to file and pay taxes. In addition to the 180 days, their deadline is extended by the number of days that were left for them to file their return with the IRS when they entered a combat zone or began serving in a contingency operation.
Example
Juan is a U.S. Marine who has served in a combat zone since March 15th and is therefore entitled to receive extra time to file and pay his taxes. The 31 days between the date he entered the combat zone and the April 15th filing deadline are added to the normal extension period of 180 days, so he has a 211 day extension period after he leaves the combat zone.
If an individual cannot file their return by the original due date, they may be able to get an automatic six-month extension of time to file. An Individual can get the automatic extension by either using IRS E-file (electronic filing), or filing a paper form, IRS Form 4868, Application for Automatic Extension of Time.
It is possible to automatically file for an extension by paying any estimated tax due via credit or debit card using an IRS approved provider of this service.
The extension of time to file is not an extension of time to pay any taxes due. Even if IRS Form 4868 is filed, interest and late payment penalties will still accrue on any unpaid portion of taxes owed, from the date the return was originally due until the date the return is filed and the taxes paid in full. This is why even though an extension is typically extended for six months, the return should still be completed as soon as possible.
Accounting Methods and Periods
There are two types of accounting periods:
Calendar year: A 12-month period ending December 31.
Fiscal year: A 12-month period ending on the last day of any month other than December.
Accounting Period Requirements:
All taxpayers may use the calendar year period; however, the fiscal year period may be adopted only by taxpayers that maintain adequate records.
Accounting period is established when the individual or business files the initial income tax return. Changing accounting periods can only be done with IRS consent.
Accounting Methods
Cash Method
Income is reported in the year that it is actively or constructively received and expenses are reported in the year the payments are made.
The concept of "constructive receipt" requires that cash-basis taxpayers be taxed on income when it becomes available and is not subject to substantial limitations or restrictions, regardless of whether it is actually in their physical possession.
For example, a check received is taxable income although the taxpayer has not yet deposited it. This is because the income is available and is not subject to limitations or restrictions.
Cash Method is generally used by the following
Individuals
Partnerships that do not have C Corps as partners
Corporations or partnerships, if annual gross receipts for all prior years do not exceed 25 Million (This is a new amount that has been increased under TCJA from the previous 5$$ million dollar limit)
Certain Farming Businesses
Qualified personal service corporations in the fields of accounting, law, engineering, health, consulting, architecture, actuarial science, or performing arts
Original Issue Discount (OID):
OID is normally created when a debt, usually a bond, is issued at a discount.
The Original Issue Discount Code (OID Code) requires that the OID be reported when earned, regardless of the accounting method.
Accrual Method
Report expenses when incurred, not paid and income when it is earned, not when collected.
The income does not have to be received and the expenses do not have to be paid in actuality.
Under the accrual method, prepaid income is taxed in the year of receipt and is not deferred to the next tax year. Prepaid rents and prepaid interest may not be deferred as well.
Hybrid Method (also known as Combination Method)
The hybrid method is a combination of the accrual and cash methods of accounting.
An accounting method clearly reflects income only if all items of gross income and expenses are treated the same from year to year.
Accounting Method Changes are warranted when the following events take place:
Change from cash to accrual basis
Change in inventory valuation.
Change from the completed contract method to the percentage of contract method.
If the taxpayer changes their method of accounting, they must make adjustments to income in the year of the change
Other Various Forms of Taxes
Real Estate Personal Property Taxes
A form of tax that most people are required to pay in order to remain fiscally compliant is real estate taxes.
Real Estate property tax is charged on immovable property such as land and structures that are permanently attached to the ground.
Local governments use property tax revenue to fund important programs and projects, including public schools and infrastructure (such as roads and bridges).
This tax represents a major cost for many homeowners.
Terms and situations related to property taxes:
Tax Rates
Property tax is levied on taxpayers as a flat rate percentage of the value of property.
Tax rates vary widely from one municipality to another, but they are the same for every resident of a given district.
Several different levels of government are allowed to collect property tax, including states, counties, school districts and special districts, such as fire districts.
An individual taxpayer's property tax burden is the combined percentage of property value from each of these institutions.
States may impose a maximum total property tax, which is the most an individual in the state can be expected to pay as a sum of each municipality's tax rate.
Property Value
Property value is determined through an assessment by a government-appointed inspector.
Assessors are like commercial home appraisers, using many different processes and statistics to compute the value of a home.
Some municipalities tax not only real property (like land and homes) but also personal property, including motor vehicles and other valuable possessions.
As property value increases or decreases, so too does the owner's property tax liability.
Assessments
Local governments perform assessments to determine property value solely for taxation.
Assessors make a visual inspection of the property and note any recent improvements or specific problems.
Assessors also use market data, including recent home sale prices and the desirability of a neighborhood, to determine property value for taxing.
Homeowners can appeal an assessment increase through the state, where an appeals board will determine whether or not the new assessment should stand.
Government Need
Governments may increase or decrease tax rates based on the need for funding.
Tax rate increases may also be proposed to fund special projects like improvements to schools.
Lowering tax rates may attract new residents, which is a strategy states can use to draw in workers and improve the local economy.
Low property tax rates are also a way to attract retirees to a state or county.