Paying SO 2018 taxes ahead of time in Dec

with the loss of the Tax credit write off > 10,000, does it make sense and is it possible to pay all or part of your 2018 tax bill (>10,000) ahead of time to take advantage of the write off in 2017? Is it possible to pay ahead?

South Orange has enabled the prepayment feature on its online payment website to allow taxpayers to prepay their 2018 property taxes. You should check with your accountant to see if you would pay AMT, in which case any benefit would be lost. 

"THE PREPAY FEATURE HAS BEEN ENABLED ON THE VILLAGE TAX PAYMENT WEBSITE."

"Please be advised that you may now prepay your 2018 taxes on our website beyond the first quarter that is coming due in February. Due to many inquiries received in my office regarding the upcoming new tax regulation and requests to prepay some part of 2018, we have asked our software company to make the feature available for anyone interested in paying more than just the first quarter. If your taxes are paid from escrow through your mortgage company, you might want to talk to them first and arrange with them not to pay your upcoming taxes. I hope this will help answer many of the questions we have been getting."

http://southorange.org/CivicAlerts.aspx?AID=1038

was there ever a response as whether there was a provision added to the tax bill that prohibited this? I had read on another thread they were trying to close this loophole.

conandrob240 said:

was there ever a response as whether there was a provision added to the tax bill that prohibited this? I had read on another thread they were trying to close this loophole.

Here is the full text of the provision dealing with state and local taxes. It only disallows a deduction in 2017 for state income taxes attributable to 2018. it does not disallow a deduction for 2018 property taxes paid in 2017. 

 SEC. 11042. LIMITATION ON DEDUCTION FOR STATE AND LOCAL, ETC. TAXES.

(a) In General.—Subsection (b) of section 164 is amended by adding at the end the following new paragraph:

“(6) LIMITATION ON INDIVIDUAL DEDUCTIONS FOR TAXABLE YEARS 2018 THROUGH 2025.—In the case of an individual and a taxable year beginning after December 31, 2017, and before January 1, 2026—

“(A) foreign real property taxes shall not be taken into account under subsection (a)(1), and

“(B) the aggregate amount of taxes taken into account under paragraphs (1), (2), and (3) of subsection (a) and paragraph (5) of this subsection for any taxable year shall not exceed $10,000 ($5,000 in the case of a married individual filing a separate return).

The preceding sentence shall not apply to any foreign taxes described in subsection (a)(3) or to any taxes described in paragraph (1) and (2) of subsection (a) which are paid or accrued in carrying on a trade or business or an activity described in section 212. For purposes of subparagraph (B), an amount paid in a taxable year beginning before January 1, 2018, with respect to a State or local income tax imposed for a taxable year beginning after December 31, 2017, shall be treated as paid on the last day of the taxable year for which such tax is so imposed.”.

still confused- should we try to prepay or not? "atttributable" and "paid" in Cramer's first sentence not clear to me

cramer said:

The preceding sentence shall not apply to any foreign taxes described in subsection (a)(3) or to any taxes described in paragraph (1) and (2) of subsection (a) which are paid or accrued in carrying on a trade or business or an activity described in section 212. For purposes of subparagraph (B), an amount paid in a taxable year beginning before January 1, 2018, with respect to a State or local income tax imposed for a taxable year beginning after December 31, 2017, shall be treated as paid on the last day of the taxable year for which such tax is so imposed.”.

Nasty and very petty.

The one time break for 2018, to allow the 2018 tax to be prepaid in 2017 and credited as being paid in 2017, they disallow the credit.

They certainly took care of the middle class.    

Meanwhile, corporations and the very rich will be rewarded eternally under this new tax plan.

So it appears that we may be able to pay property tax in advance, but not income tax?

I went out yesterday in a fit of pique and paid our whole 2017 property tax (the bill is headed "2017"), though it wasn't really due till after EOY.  From the above, I'm guessing that will be deductible on 2017 tax return, not limited to $10,000 (though subject to getting snarled up in alt min tax).  Maybe a prepayment of 2018 property tax would also work, though it hasn't yet been billed??  But I'm not going there, personally.

I also paid the final installment of 2017 state income tax yesterday.  From the above that looks OK too (deductible on 2017 federal return, ie under current rules).  But if I tried to go ahead now and pay some 2018 state income tax, that would only be deductible on the on the 2018 tax return, ie, under the new rules.

Does this seem a correct reading to others?  Despite everyone's good advice, I am too lazy, too busy and too cheap to go for professional advice before EOY.

PS cramer, thanks for posting the text!

drewdix said:

still confused- should we try to prepay or not? "atttributable" and "paid" in Cramer's first sentence not clear to me

"attributable" means 

"with respect to a State or local income tax imposed for a taxable year beginning after December 31, 2017, shall be treated as paid on the last day of the taxable year for which such tax is so imposed.”.

If you pay state estimated income taxes for the tax year 2018 "before January 1, 2018," it will be treated as if you paid the tax in 2018 (and the provision only applies to state or local INCOME tax.) 

You can get a deduction for 2018 property taxes paid in 2017 since they're  not referred to and if property taxes had been meant to be not eligible for prepayment they would have been specifically excluded, as were state income taxes. 

Yes.  If you want to be able to get an additional deduction for state income tax on your 2017 state income taxes, you can make the 4th installment of your 2017 state estimated tax payment before the end of the year and overpay and choose to have the excess amount credited to your 2018 federal taxes instead of getting a refund. At the minimum, just go ahead and pay the 4th installment now instead of waiting until Jan. 16.

mjc said:

So it appears that we may be able to pay property tax in advance, but not income tax?

my accountant just confirmed that is liable for AMT, then no benefit to paying estimated tax on income or property tax ahead of time in     2017

AMT has closed our discussion of this too.  Also, to do so would require moving money from investments (which are still rewarding this tax bill) or using HELOC, knowing interest rates are poised to climb.  Not to mention having to fuss with escrow.

Awesome because I already paid 1/2 a year property taxes for 2018.

Where can I find a good summary of allowed deductions? Mostly interested in mortgage, property tax and expenses associated with a vacation home used pt as rental property.

cramer said:

conandrob240 said:

was there ever a response as whether there was a provision added to the tax bill that prohibited this? I had read on another thread they were trying to close this loophole.

Here is the full text of the provision dealing with state and local taxes. It only disallows a deduction in 2017 for state income taxes attributable to 2018. it does not disallow a deduction for 2018 property taxes paid in 2017. 

 SEC. 11042. LIMITATION ON DEDUCTION FOR STATE AND LOCAL, ETC. TAXES.

(a) In General.—Subsection (b) of section 164 is amended by adding at the end the following new paragraph:

“(6) LIMITATION ON INDIVIDUAL DEDUCTIONS FOR TAXABLE YEARS 2018 THROUGH 2025.—In the case of an individual and a taxable year beginning after December 31, 2017, and before January 1, 2026—

“(A) foreign real property taxes shall not be taken into account under subsection (a)(1), and

“(B) the aggregate amount of taxes taken into account under paragraphs (1), (2), and (3) of subsection (a) and paragraph (5) of this subsection for any taxable year shall not exceed $10,000 ($5,000 in the case of a married individual filing a separate return).

The preceding sentence shall not apply to any foreign taxes described in subsection (a)(3) or to any taxes described in paragraph (1) and (2) of subsection (a) which are paid or accrued in carrying on a trade or business or an activity described in section 212. For purposes of subparagraph (B), an amount paid in a taxable year beginning before January 1, 2018, with respect to a State or local income tax imposed for a taxable year beginning after December 31, 2017, shall be treated as paid on the last day of the taxable year for which such tax is so imposed.”.

Check with your accountant. Here's the full text of the tax bill: 

https://www.congress.gov/bill/115th-congress/house-bill/1/text

Here's the summary: 

https://www.congress.gov/bill/115th-congress/house-bill/1

conandrob240 said:

Awesome because I already paid 1/2 a year property taxes for 2018.




Where can I find a good summary of allowed deductions? Mostly interested in mortgage, property tax and expenses associated with a vacation home used pt as rental property.