Posted on 12/24/2017 4:21:04 AM PST by 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.
(Excerpt) Read more at syracuse.com ...
““I’m getting swamped with many, many calls, usually one an hour,..”
Wow! One call a hour./sarc
The easiest way to get around these stupid tax provisions is to buy a relative's house in the same state and sell your home to that same relative. Pay rent to each other through LLCs that you establish for each property. You will be able to deduct all of your property taxes and maintenance costs, along with depreciation on the property as well.
I wouldn't be surprised if CPAs for wealthy homeowners in some of these high-tax states are cooking up schemes like this already.
Hey that’s a lot for government. Remember, you have to squeeze in multiple coffee breaks, porn streaming, personal shopping, and chitchatting with cube neighbors in that hour too.
It’s upsetting. Pause the video, answer the phone, talk to the idiot taxpayer, restart the video...
Yeah, and when you figure they may to work 7 hour days...?Brutal.
Unfortunately, you are correct.
“The Standard Deduction was not doubled. No, the Personnel Exemption was removed as a separate item and included with the Standard Deduction.”
Twisted logic.
https://www.cnbc.com/2017/12/22/the-gop-tax-overhaul-kept-this-1300-tax-break-for-seniors.html
Did you read the article?
“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.”
That may be the best portion of the Trump Tax Cut but that number should have been reduced to $5,000 or even $1,000.
Thanks. So what does a "good faith estimate" entail?
If people have "faith" that their 2018 property tax bill is going to be $XX,XXX, would that suffice?
I am guess you will weigh in with no, but it appears the IRS needs to be more forthcoming with information. They need to issue very clear guidelines - now.
The repeal of the deduction for state and local income taxes would be effective for tax years beginning in 2018. This raises the question of whether individual taxpayers should consider prepaying part, or even all, of their predicted 2018 state income tax liability in 2017 so as to get a federal deduction for the payment. It would be one thing to prepay in 2017 a state estimated income tax payment that is due on April 15, 2018, but could this be pushed farther? Could a taxpayer prepay his or her entire predicted 2018 state income tax liability in 2017 and get a deduction for it in 2017? Could the IRS challenge such a position based on a general argument that it would distort the taxpayer’s liability? The IRS has not addressed this issue in published guidance, but rulings suggest that a cash-basis taxpayer can deduct state income taxes when paid if the payments are based on a reasonable estimate of tax liability (Rev. Rul. 71-190, 1971-1 C.B. 70; Rev. Rul. 82-208, 1982-2 C.B. 58). Section 461 of the Internal Revenue Code, which generally addresses the timing of deductions, would not seem to apply to this situation. Of course, prepaying state or local income taxes could be done only if it were permitted by the laws of the applicable jurisdiction.
For every hundred dollars in taxes you deduct, how much does that reduce your taxes?
I tried to do this, but my tax due in February isn't posted yet.
That's not true that people "don't care." For instance, one of the chief reasons Chris Christie was elected (twice) in NJ was because he finally put a cap on property tax raises, which had gone bananas during the administrations of Florio, McGreevy, and Corzine.
But what people in states like NY and elsewhere face is an IRS on the Federal level that is merciless, and states and local governments on the other that are tone deaf. People are being squeezed.
I love it when people post: "Well, why do you just get them to lower taxes?"
Sure, I'll drain the oceans while I am at it.
Very good question.
There is a difference between a tax credit (a dollar-for-dollar reduction of tax) and a tax deduction (to calculate how much a deduction is worth you must know your marginal tax rate).
I agree with you and add that present itemizers may get hit .... but that is not what he was saying.
“”In CT we can pay our 2017 tax in 2 installments. One is due in July, the other is due in January””
I wondered about that when an earlier post mentioned the last installment isn’t due until NEXT YEAR. I’ve never lived in a state where property taxes aren’t due and paid in the same year - maybe a couple of months apart but here in GA, 100% is due in October...
Doesn’t this change pertain to disallowing anything OVER $10,000? I don’t know about the majority of posters but that’s a lot of property tax so how many people pay even close to $10,000 per year, let alone OVER $10,000? IMO if they are in that category, why are they complaining? Apparently money isn’t a problem...
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.