PREPAY REAL ESTATE TAXES NOT INCOME TAXES
While we await the finalizing of the proposed tax legislation, The Tax Cut and Jobs Act, many tax advisors were suggesting clients prepay state and local income and property taxes related to year end 2018 in 2017. This is because it was clear in the proposed legislation that these deductions will be eliminated, or severely limited, after 2017.
Prior to finalizing the potential new law, the drafters made clear that any prepayments of 2018 personal state and local income taxes in 2017 will not be treated as a 2017 deduction. For those individuals planning on prepaying 2018 income taxes in advance of 2018, the proposed law states such payment will not provide a 2017 income tax deduction.
However, while a deduction for prepayments of 2018 state and local income taxes is not available, we still recommend planning for prepayment of 2017 state and local income taxes that pertain to 2017, up to the amount allowable, and not limited by the alternative minimum tax (AMT). The rule noted above does not apply to realty taxes. Many towns and cities encourage prepayment of the 2018 town and school taxes in order to benefit from the itemized deductions while available. These billings are usually issued in late December, but are currently available online at the County website.
Wed, December 20, 2017