FAQ: Can I prepay my taxes for 2018? Should I?

If you see a big line in front of your town or city hall this week, don’t be alarmed. It’s not a vote you don’t know about – it’s likely people lining up to prepay their property taxes.” data-reactid=”15″>If you see a big line in front of your town or city hall this week, don’t be alarmed. It’s not a vote you don’t know about – it’s likely people lining up to prepay their property taxes. The new tax plan passed by the GOP brings sweeping changesto the state and local tax deductions, including the property tax. Under the old system, a homeowner could deduct all these taxes from their federal income tax liability. This move effectively transferred funds from the federal government to the states and saved homeowners $35 billion in 2016,according to the Tax Policy Center. In 2018, the deduction is capped at $10,000.” data-reactid=”16″>The newtax plan passed by the GOP brings sweeping changesto the state and local tax deductions, including the property tax. Under the old system, a homeowner could deduct all these taxes from their federal income tax liability. This move effectively transferred funds from the federal government to the states and saved homeowners $35 billion in 2016,according to the Tax Policy Center. In 2018, the deduction is capped at $10,000. But what if you prepay your 2018 tax bill in 2017, when the deduction still exists? In some cases it’s allowed.” data-reactid=”17″>But what if you prepay your 2018 tax bill in 2017, when the deduction still exists? In some cases it’s allowed. For state and local income taxes, the bill prevents it.” data-reactid=”19″>For state and local income taxes, the bill prevents it. While the bill makes prepayments for income tax count only in the year the tax is imposed — it doesn’t say anything about property taxes, so prepaying is being considered fair game.” data-reactid=”23″>While the bill makes prepayments for income tax count only in the year the tax is imposed — it doesn’t say anything about property taxes, so prepaying is being considered fair game. “Unless and until guidance is issued to the contrary, you can prepay your property taxes to the extent your local tax assessor accepts prepayments,” said Barry Kleiman, a CPA and principal at Untracht Early, an accounting firm based in New Jersey, told Yahoo Finance. ” data-reactid=”24″>“Unless and until guidance is issued to the contrary, you can prepay your property taxes to the extent your local tax assessor accepts prepayments,” said Barry Kleiman, a CPA and principal at Untracht Early, an accounting firm based in New Jersey, told Yahoo Finance. Judging by how the law was written — with it explicitly saying “income tax” and not property tax — prepayment is being considered legit by many localities. So if you prepay your real estate taxes for 2018 in 2017, the payment can be used as an itemized deduction on your 2017 tax return under the old system, potentially saving homeowners — especially those in high-tax states — quite a bit of money.” data-reactid=”25″>Judging by how the law was written — with it explicitly saying “income tax” and not property tax — prepayment is being considered legit by many localities.So if you prepay your real estate taxes for 2018 in 2017, the payment can be used as an itemized deduction on your 2017 tax return under the old system, potentially saving homeowners — especially those in high-tax states — quite a bit of money. —finance.yahoo.com