Anyone else prepaying property taxes so you can still deduct them this year?

[starry_solo]

In our county it's not technically prepayment. The 2017 taxes are due in two installments - one in Nov 17 and one in Apr 18. I'm just paying my Apr 18 payment before December 31st. Most counties won't take payment for the 2018 tax year if the assessment hasn't been performed.

Mine too.

 

[punkin]

In our county it's not technically prepayment. The 2017 taxes are due in two installments - one in Nov 17 and one in Apr 18. I'm just paying my Apr 18 payment before December 31st. Most counties won't take payment for the 2018 tax year if the assessment hasn't been performed.

My county just passed (yesterday) a way to prepay, but there have been no 2018 assessments yet. I'm worried if I prepay the IRS will just disallow it. Also, we are on the AMT cusp, I have to run the exact figures (which I won't have in time) to see if this will even make any difference.

 

[cruiser21]

In our county it's not technically prepayment. The 2017 taxes are due in two installments - one in Nov 17 and one in Apr 18. I'm just paying my Apr 18 payment before December 31st. Most counties won't take payment for the 2018 tax year if the assessment hasn't been performed.

Same here were due December and May. We could pay the May one now for the write off if we wanted to. I think there are some people that pay monthly with their mortgage payment.

 

[wendow]

I don’t believe that’s true. I can’t think of anywhere that’s over 4%, but I don’t believe there’s a legislative cap. With MUD’s, ESD’s, healthcare districts and community colleges, that rate can get pretty high.

You may be right because I cannot find anything to support that it's actually legislated. I was told that by a relative years ago who was fighting his property tax increase and had done a lot of research into TX property taxes. And yes, I know in MUD areas, those rates can be quite high.

 

[Minnesota!]

To be honest, I have not paid much attention to this because I don't get a say in it either way - I just roll with it.

However, I did the calculator and it said I would be saving about $2600 with the new plan..

We pay about $2200 in property taxes on our tiny home in a first-ring suburb. We are upper-middle class, with student loan debt and a mortgage. We pay about 4500/year in interest on our mortgage. 2 kids.

Does saving 2600 sound about right to those of you that understand this a little more?

 

[MomToOne]

Ugh - just called Chase to deal with getting the second installment of my 2017 property taxes paid early. I escrow, so I just need them to either not pay them this March (and I will just pay them directly online today myself) or to pay them early out of escrow. The recorded message sounds like they will prepay them from escrow if you request it, but it has to be requested by today, and the current wait time for an agent is is 3-5 HOURS! (Thankfully they have a call back option)

 

[robinb]

I heard a radio interview with a tax professional yesterday. She said she has been reviewing people’s tax returns to see if paying in advance would be beneficial. She said out of 60 returns she’s reviewed only 4-5 of them should pay their taxes in advance. She also said that paying your 2018 taxes in advance might actually hurt you as paying them may somehow push you into the alternative minimum tax category.

 

[Hikergirl]

I heard a radio interview with a tax professional yesterday. She said she has been reviewing people’s tax returns to see if paying in advance would be beneficial. She said out of 60 returns she’s reviewed only 4-5 of them should pay their taxes in advance. She also said that paying your 2018 taxes in advance might actually hurt you as paying them may somehow push you into the alternative minimum tax category.

I'm in NY so all over the news is stories about people standing in long lines to get their taxes pre-paid and I wondered how many are going to be surprised when they find out it was pointless because they are already paying the AMT.

 

[GrnMtnMan]

She also said that paying your 2018 taxes in advance might actually hurt you as paying them may somehow push you into the alternative minimum tax category.

Is there a requirement that you have to itemize the entire amount you’ve paid? This isn't income after all, its deductions from income that lessen your taxes....

It could be a strange situation this year where it might make sense not to deduct the entire amount of paid property taxes. Say you pay $100, but the last $20 bumps you into the AMT. So only deduct $80 to stay under the AMT threshold.

 

[candy0730]

I am confusing myself and hope someone has a clear answer.....if my taxes won't be greater than the standard deduction next year doesn't it make sense to prepay my property taxes this year and have more to write off since I won't be itemizing next year? I am not in danger of being bumped to AMT. A few details if it helps. Property tax = $5000, income tax = $4500 and mortgage interest = $3500. TIA!

 

[Hikergirl]

IRS announced that 2018 property taxes will be deductible as long as they are assessed and paid for in 2017.
Hope you guys get them in in time

 

[MomToOne]

I heard a radio interview with a tax professional yesterday. She said she has been reviewing people’s tax returns to see if paying in advance would be beneficial. She said out of 60 returns she’s reviewed only 4-5 of them should pay their taxes in advance. She also said that paying your 2018 taxes in advance might actually hurt you as paying them may somehow push you into the alternative minimum tax category.

I don't know whose taxes she's evaluating exactly - if you are close to AMT before adding in the extra tax payment, or have REALLY high property taxes, then it could definitely throw you into AMT when you weren't there before. But I find it hard to believe that's 90% of folks. Property taxes sound higher in NY than CA, so maybe she's looking at mostly those folks. I'm in CA and paying the 2nd installment of my 2017 taxes early does not throw me into AMT - it brings me closer to it, but not there. I did all the calculations to double check that.

 

[Hikergirl]

I don't know who taxes she's evaluating exactly - if you are close to AMT before adding in the extra tax payment, or have REALLY high property taxes, then it could definitely throw you into AMT. But I find it hard to believe that's 90% of folks (maybe her clientele just tends towards one of the groups hit by the items in my first sentence). Property taxes sound higher in NY than CA, so maybe she's looking at mostly those folks. I'm in CA and paying the 2nd installment of my 2017 taxes early does not throw me into AMT - it brings me closer to it, but not there. I did all the calculations to double check that.

One of the articles I read about people lining up was about Rockland County in NY. I believe they rank as one of the highest property tax counties in the country so I wonder how many of those people will find out that doing so will bump them into the AMT range, or if they are already there and don't realize that pre-paying their taxes will be pointless then.
I'm not sure people did their research and ran the numbers or if they just panicked and thought to pre-pay without knowing how it will effect them.
Glad it works out for you!

 

[Alexle2007]

Ugh - just called Chase to deal with getting the second installment of my 2017 property taxes paid early. I escrow, so I just need them to either not pay them this March (and I will just pay them directly online today myself) or to pay them early out of escrow. The recorded message sounds like they will prepay them from escrow if you request it, but it has to be requested by today, and the current wait time for an agent is is 3-5 HOURS! (Thankfully they have a call back option)

I remember having an argument with my former mortgage lender because they would not send in the taxes in early to get the discounted rate but would wait until the last date and I would pay the higher amount. I think they finally listened to me but still. I am so glad we don’t escrow our taxes or insurance anymore. Although I hate writing that big check. I could put it on my CC but that defeats the point since I then have a large extra fee to cover.

 

[cruiser21]

To be honest, I have not paid much attention to this because I don't get a say in it either way - I just roll with it.

However, I did the calculator and it said I would be saving about $2600 with the new plan..

We pay about $2200 in property taxes on our tiny home in a first-ring suburb. We are upper-middle class, with student loan debt and a mortgage. We pay about 4500/year in interest on our mortgage. 2 kids.

Does saving 2600 sound about right to those of you that understand this a little more?

Sounds about right. Your deductions are about the same as ours. No student loan debt though. We've been deducting stock market losses from 2010. I'm not sure how many years we would have been able to do that, but I guess this will be the last year.

 

[MomToOne]

I remember having an argument with my former mortgage lender because they would not send in the taxes in early to get the discounted rate but would wait until the last date and I would pay the higher amount. I think they finally listened to me but still. I am so glad we don’t escrow our taxes or insurance anymore. Although I hate writing that big check. I could put it on my CC but that defeats the point since I then have a large extra fee to cover.

I actually get a better interest rate on my escrow account than I can get on any savings account right now thanks to CA state laws, and there is no discount for paying early, so I'm generally good with escrowing.

Chase seemed to have the process down by the time I got thru (the full 5 hours later) - it was too late for them to pay out of my escrow (which I had decided I didn't want anyway because I was afraid it would cause a crazy re-evaluation down the line), but they were good with me paying it ahead. All I have to do is send them the receipt showing I paid it, then they will cancel their normal March payment. I'll get the money back when my escrow re-evaluates in April. Thankfully my county allows payment online from a checking account for just a tiny fee. Easy peasy - I had it done it minutes. And I'll get almost a thousand extra back on my taxes this year that would be lost otherwise.

 

[punkin]

I don't know whose taxes she's evaluating exactly - if you are close to AMT before adding in the extra tax payment, or have REALLY high property taxes, then it could definitely throw you into AMT when you weren't there before. But I find it hard to believe that's 90% of folks. Property taxes sound higher in NY than CA, so maybe she's looking at mostly those folks. I'm in CA and paying the 2nd installment of my 2017 taxes early does not throw me into AMT - it brings me closer to it, but not there. I did all the calculations to double check that.

I just figured out that if I prepay, I will be hit by the AMT. Last year we were $44 below the AMT. This year (absent the overpayment) we shouldn't hit near it, but the overpayment would cost us an extra $200 to $300. No reason to do that now.

 

[floridafam]

Our local newspaper said Florida doesn’t allow for pre-payment of property taxes. FYI.

 

[Colleen27]

We're in a similar boat with the impact of the plan but since there's no way we'll be itemizing, we can't really do anything about it. Losing the personal exemption really hurts us. We'll go from 33,750 in standard deduction/personal exemptions to the new 24,000 standard deduction, and since only one of the kids is young enough to qualify for the expanded child tax credit, that isn't enough to offset the sudden increase in our taxable income. The calculators I've seen have been all over the place, from a $400 increase to a $1500 cut, but my own back-of-the-napkin math doesn't look promising. I suppose only time will tell but either way I don't see the extra few bucks as worth the safety net trade-offs that will be demanded next year to pay for it.

 

[punkin]

We're in a similar boat with the impact of the plan but since there's no way we'll be itemizing, we can't really do anything about it. Losing the personal exemption really hurts us. We'll go from 33,750 in standard deduction/personal exemptions to the new 24,000 standard deduction, and since only one of the kids is young enough to qualify for the expanded child tax credit, that isn't enough to offset the sudden increase in our taxable income. The calculators I've seen have been all over the place, from a $400 increase to a $1500 cut, but my own back-of-the-napkin math doesn't look promising. I suppose only time will tell but either way I don't see the extra few bucks as worth the safety net trade-offs that will be demanded next year to pay for it.

We are likely to get hurt as we lose exemptions for 2 college aged children and get pushed from itemized to standard deduction.