seeking an accountant who can wade though these property tax issues (prepay or not, etc.)

Can someone recommend an experienced accountant who understands the nuances of this tax code. 

what nuances are there? If your taxes are more than $10k and you have fairly liquid cash, pre-pay whatever amount leaves a remaining balance of around $10k in 2018.

Unless you hit the AMT.  My accountant claims the rules for most of this have not even been written yet.

You're gonna pay it anyway. If you pay and don't get the deduction, what is the loss?

FilmCarp said:

Unless you hit the AMT.  My accountant claims the rules for most of this have not even been written yet.

This is the key.  If you are subject to the AMT (if you were subject in 2016 and your facts are substantially similar you will likely be subject to it again in 2017) then you will get no benefit for pre-paying your property taxes.  You're better off loading up on Charitable contributions.

even if you are subject to the AMT, while no benefit, there's no downside to pre- paying. 

Forget about prepaying your RE Tax for 2017 Federal filing deduction, but do not forget to prepay your 4th estimated (due 1/15/18) state income tax -TODAY or by year-end! This deduction is not limited, only by date paid. 

actually, is there a recommendation for a local Maplewood/S.O. acountant? My process greatly simplified over the years- basically 2 W2's, some basic usual deductions and that's it. 

Pizzaz said:

Forget about prepaying your RE Tax for 2017 Federal filing deduction, but do not forget to prepay your 4th estimated (due 1/15/18) state income tax -TODAY or by year-end! This deduction is not limited, only by date paid. 

Why do you say ‘Forget about prepaying your RE Tax for 2017 Federal filing deduction’? It is a perfectly reasonable strategy for many if cash flow allows. What downside do you see? 

I will say that my accountant suggested paying only the 1st and 2nd quarter amounts, which is what I have done. I understand this rec to be because the town has not yet billed for the later quarters. She also mentioned AMT, but I think the risk there is loss of the deduction, which is going to happen anyway under the new tax law, so not much to lose and possibly lots to gain.

And, yes, I DID pay my 4th quarter NJ income tax already, rather than wait until the January due date.

conandrob240 said:

even if you are subject to the AMT, while no benefit, there's no downside to pre- paying. 

The downside is only from a cash flow perspective and if you have the extra cash you'd be better off making a tax deductible contribution.

I heard an accountant on NPR (from my town actually) who reviewed 80 client's tax situations and of those, only 4 did she recommend to prepay taxes.   In many cases it makes the situation worse or at best, negates any gains.

I guess, assuming it had to be one or another. 

I wasn’t thinking about this instead of any charitable contributions.

sportsnut said:

conandrob240 said:

even if you are subject to the AMT, while no benefit, there's no downside to pre- paying. 

The downside is only from a cash flow perspective and if you have the extra cash you'd be better off making a tax deductible contribution.

sac said:

I will say that my accountant suggested paying only the 1st and 2nd quarter amounts, which is what I have done. I understand this rec to be because the town has not yet billed for the later quarters. She also mentioned AMT, but I think the risk there is loss of the deduction, which is going to happen anyway under the new tax law, so not much to lose and possibly lots to gain.




And, yes, I DID pay my 4th quarter NJ income tax already, rather than wait until the January due date.

What is there to gain by pre paying early?

The idea is that if you have more than $10,000 in property taxes, next year you won't be able to deduct the overage, but if you pre pay in this calendar year you can.

The IRS issued guidelines today that property taxes are deductible in 2017 if assessed and paid in 2017. Since the 1st and 2nd quarter 2018 are assessed in 2017, they're deductible if paid in 2017.

This means that you can only get a deduction for Q1 and Q2 - there has been no assessment beyond that. 

drewdix said:

actually, is there a recommendation for a local Maplewood/S.O. acountant? My process greatly simplified over the years- basically 2 W2's, some basic usual deductions and that's it. 

If it's that simple why do you need an accountant? But if you do want a local one call Marco DeLuca on Ridgewood Road in Maplewood near border of SO.

LOST said:

drewdix said:

actually, is there a recommendation for a local Maplewood/S.O. acountant? My process greatly simplified over the years- basically 2 W2's, some basic usual deductions and that's it. 

If it's that simple why do you need an accountant? But if you do want a local one call Marco DeLuca on Ridgewood Road in Maplewood near border of SO.

Fair point. I just always think I'll miss something. And even though remote, it's less of a red flag/audit possibility. Maybe I'll try it this year- been a long time since I did it myself.

boomie said:

The idea is that if you have more than $10,000 in property taxes, next year you won't be able to deduct the overage, but if you pre pay in this calendar year you can.

I get that.  I'm actually a CPA.  SAC seemed to indicate that even if you are subject to AMT there was something to be gained.

sportsnut said:

sac said:

I will say that my accountant suggested paying only the 1st and 2nd quarter amounts, which is what I have done. I understand this rec to be because the town has not yet billed for the later quarters. She also mentioned AMT, but I think the risk there is loss of the deduction, which is going to happen anyway under the new tax law, so not much to lose and possibly lots to gain.




And, yes, I DID pay my 4th quarter NJ income tax already, rather than wait until the January due date.

What is there to gain by pre paying early?

It goes on your 2017 return instead of 2018 so is deductible under the old rules. 

sportsnut said:

boomie said:

The idea is that if you have more than $10,000 in property taxes, next year you won't be able to deduct the overage, but if you pre pay in this calendar year you can.

I get that.  I'm actually a CPA.  SAC seemed to indicate that even if you are subject to AMT there was something to be gained.

I said "not much to lose and possibly lots to gain." By "not much to lose" I meant that if AMT disallows, then you have just lost the use of the funds a few months early. By "possibly lots to gain" I was referring to the case where you aren't subject to AMT and DO get the deduction on the 2017 return.  I am one of the people who sometimes gets hit by AMT and sometimes not.  If you know that you will be subject to AMT then there wouldn't be anything to be gained. And, I suppose it is possible that the extra income generated for 2018 by the refund could also have AMT implications, but given the increase in AMT threshold in the new law, I have my doubts that would make a difference. 

Since so many people are doing it, I doubt that prepayment of 2018 property taxes is going to be a red flag for audits this go-round. But I have no inside knowledge of the IRS procedures on this sort of thing.