Want to prepay property taxes to beat federal tax overhaul? Here's what we've learned

Syracuse.com ^ | 22 Dec 17 | Michelle Breidenbach

[SkyPilot]

The people who collect taxes in New York are acting fast to help taxpayers try to get ahead of a pitfall for homeowners in the new federal tax overhaul.

The tax bill, which passed earlier this week, is confusing. Here's what we know:

The bill will no longer allow taxpayers to deduct more than $10,000 in state and local income and property taxes from their federal income taxes.

At the same time, it doubles the standard deduction to $12,000 for a single taxpayer and $24,000 for a family.

That means more people will no longer itemize their taxes.

But there is one strategy homeowners who itemize now can use to beat the bill.

If your county allows payment of 2018 property taxes at the end of 2017, you can pay now and take the deduction on your federal income taxes in the spring, according to many news sources.

Some tax collectors and other government officials are going out of their way over short-staffed holidays to make this happen.

But the news has also set off a storm of skeptics who wonder if the IRS will really allow it.

The bill passed earlier this week in Washington prohibited the deduction of prepaid state and local income taxes. But Congress was silent on the prepayment of property taxes, said Stephen Acquario, executive director of the New York State Association of Counties.

"Ultimately, it will be up to the IRS to determine if the prepayment of 2018 property taxes are deductible for the 2017 tax year," he said.

Many taxpayers have been prepaying county property taxes and taking the early federal deduction for years. One town tax collector said she keeps a list of people who prepay and gets the bills to them ASAP.

[CatOwner]

Well, the additional $1,300 for one of us will reduce the extra federal taxes we will owe in 2018 from $600-800 to $450-650. Being fully retired for the first time in 2018, I sense our cash charitable contributions are going to be lower to make up the difference.

[ConservativeMind]

That graphic is not the law that was passed.

[ConservativeMind]

Pre-paying your taxes is not against the law, it’s just not deductible as expected.

[ConservativeMind]

That means in all other states, which are the vast majority, all Democrats’ seats are in the same jeopardy.

[ConservativeMind]

Great point, Svartalfiar. So two children still means $20,000 in extra deductions, over and above the new $24,000 expanded deductions.

This is far better than Skypilot has been saying.

Sorry, SkyPilot.

[SkyPilot]

Have a very Merry Christmas.

[House Atreides]

You got that right about the AMT. I have Turbotax’ 2017 software and ran my info thru it both prepaying and not prepaying. And es macht nichts! “Regular” tax goes down but the AMT goes up by the exact same amount.