Tax Reform Alerts

Congress is working to combine the Senate and House versions of the Tax Cuts and Jobs Act with the hope of passing far-reaching tax reform into law by the end of 2017. The laws could include significant tax reforms that will affect businesses and individuals as soon as 2018.

If you typically itemize your tax deductions, you could see an increase in your 2018 taxes. One of the best ways to prepare for this is maximizing your deductions this year. We will be outlining ways for you to do this over the next few weeks in our Tax Reform Alerts.

December 29, 2017 – Prepay Property Taxes? 

One of the things the new Tax Cuts and Jobs Act will do is reduce deductions for state and local taxes to $10,000 in 2018. While the law specifically says you can’t prepay income taxes for the new year, it left an opening to prepay property taxes. But… the IRS wants you to know it’s only available in certain situations.

According to the IRS on Wednesday, “The IRS has received a number of questions from the tax community concerning the deductibility of prepaid real property taxes. In general, whether a taxpayer is allowed a deduction for the prepayment of state or local real property taxes in 2017 depends on whether the taxpayer makes the payment in 2017 and the real property taxes are assessed prior to 2018.”

They go on to say, “Prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017.  State or local law determines whether and when a property tax is assessed, which is generally when the taxpayer becomes liable for the property tax imposed.”

If you are thinking about prepaying your property taxes in the next couple of days, make sure you are aware of how your taxes have been assessed and what your local or state laws allow.

Check back here often to keep up with daily tax reform news and advice on how to make the most of your taxes this year.