What’s the final word? Can NJ pre-pay 2018 property taxes?
nj.com's suggestions say: Yes:
"Since New Jersey homeowners have received tax bills for the first and second quarters of 2018, they can pay that amount before Jan. 1 and deduct it on their 2017 returns, when there will be no limit on how much in taxes they can claim." :
7 things you should do right now to save money before Trump tax plan kicks in on Jan. 1
I don't understand the whole "allow" thing? I'm sure towns are thrilled to receive advance payments and have all these extra months to play around with my money.
The point is you could save several thousand dollars by prepaying since as of 2018 there is a cap of $10,000 you can deduct from your property taxes (and no such cap for property taxes paid in 2017 - unless pre-payment has been blocked by the new law?)
- Alex
I understand the savings. What I don’t understand is towns making a big deal that they will “allow” it as if they are doing people a favor. They get free use of your money 7 months in advance.
I’m still not clear what the final word is anyway on whether we can even do this based upon this article and welcome any other thoughts:
https://www.cnbc.com/2017/12/18/prepaying-2018-state-income-taxes-is-blocked-in-gop-bill.html
That's a vaguely written article. It definitely says you can't prepay your income taxes... But only sorta kinda implies that you can't prepay your property taxes either... Then doesn't specifically follow up on the property tax piece.
ETA: Aha! Here's why it seems unclear: It required a correction (see bottom of the article):
(Correction: A previous version of this story incorrectly stated that property taxes could not be prepaid.)
So... it now seems to confirm that property taxes can be prepaid.
It’s been answered in other threads. Yes, 2018 property taxes can be paid in 2017.
alexj said:
I’m still not clear what the final word is anyway on whether we can even do this based upon this article and welcome any other thoughts:
https://www.cnbc.com/2017/12/18/prepaying-2018-state-income-taxes-is-blocked-in-gop-bill.html
Alternative Minimum Tax....totally different way of calculating taxes designed to catch higher income people with too many deductions. I can’t explain the details well enough to do it here, but makes prepaying property taxes less useful to many of us.
As far as Property Taxes go, what's the down side to paying '18 taxes now if the money comes from savings (which are paying bupkis, if that much). If the money comes from liquidating investments, I have no comment.
Regarding prepaying NJ income taxes; I don't see how one could do it. If you overpay in '17, you'd get a refund when you filed your '17 tax return; resulting in "18 income to be declared on your "18 1040.
On the other hand, if one expects a tax liability for '17, pay it now, take the deduction, and avoid writing the check in April.
Just thinking out loud in Maplewood.
TomR
conandrob240 said:
I understand the savings. What I don’t understand is towns making a big deal that they will “allow” it as if they are doing people a favor. They get free use of your money 7 months in advance.
I think it is more the matter of reprogramming the tax software to allow the prepayments as, honestly, I doubt people have prepaid in the past.
Often a Mortgage lender requires a home buyer to pre-pay taxes at the time of the Closing of title.
librarylady said:
conandrob240 said:
I understand the savings. What I don’t understand is towns making a big deal that they will “allow” it as if they are doing people a favor. They get free use of your money 7 months in advance.
I think it is more the matter of reprogramming the tax software to allow the prepayments as, honestly, I doubt people have prepaid in the past.
I get my property tax statement with the four tax collector payment stubs on it. We once paid six weeks in advance due to our being out of the country for an extended period. We brought the stub and the check to the tax collector. The stub lists the due date.
Right now I have the stubs for Feb and May 2018. I assumed I can bring them to the collector next week and pay them.
? You send in a check, they credit your account. It seems pretty simple to me. Not sure what software is involved. And I still think towns should be delighted by this. Money to use for 7 extra months free!
librarylady said:
conandrob240 said:
I understand the savings. What I don’t understand is towns making a big deal that they will “allow” it as if they are doing people a favor. They get free use of your money 7 months in advance.
I think it is more the matter of reprogramming the tax software to allow the prepayments as, honestly, I doubt people have prepaid in the past.
You can prepay property taxes which I did through my mortgage company, who pays my taxes directly to the city. it is deductible this year, but will again be hit by the AMT so I think it will be a moot point.
Read that Hoboken will allow pre-payment in addition to the next two quarters as a credit against your account. We asked in S.O. and was told they couldn't. Why and how can we get that to happen?
if you mail them a check, are you telling me they’d send it back? That’s ridiculous
Maplewood Township is accepting payment of 2018 Property Taxes for all four quarters. Will the IRS disallow the deduction against 2017 income, who knows?
TomR
You don’t even need your tax bill. Just go to the tax assessor and give them your address. Then tell them how much you want to pay. He’ll calculate the amount if you want to pay the entire year.
I'm out of the country - doesn't anyone know off hand HOW I could pay Maplewood property taxes for 2018 before Dec. 31/17? Can it be done via credit card, for example, or online from our checking account (with the proper routing number, etc.?) I will also call the city tomorrow but thought I'd ask now in case someone already knows (to save time). I'm also presuming that the most I should pre-pay as far as obtaining a potential tax advantage would be our 2018 total property taxes minus the $10,000 deduction that will already be allowed? Much thanks -
- Alex
The IRS said that its OK to do this:
Many Americans have rushed to prepay their 2018 property taxes and save on their federal taxes, hoping to take advantage of a tax deduction that will be scaled back in the new tax law passed by Republicans last week. The Internal Revenue Service confirmed Wednesday that taxpayers will be able to take advantage of the maneuver — but only under limited circumstances.
The IRS said that taxpayers can claim an additional property tax deduction when paying their 2017 taxes if they pay the tax this year and if the local tax authority has notified homeowners prior to 2018 of how much they owe in property taxes, known as a tax assessment. State and local laws vary as to when this occurs.
alexj said:
I'm out of the country - doesn't anyone know off hand HOW I could pay Maplewood property taxes for 2018 before Dec. 31/17? Can it be done via credit card, for example, or online from our checking account (with the proper routing number, etc.?) I will also call the city tomorrow but thought I'd ask now in case someone already knows (to save time). I'm also presuming that the most I should pre-pay as far as obtaining a potential tax advantage would be our 2018 total property taxes minus the $10,000 deduction that will already be allowed? Much thanks -
- Alex
I believe the 10,000 total can be applied to property and local income taxes. So, if your 2018 next two quarter property tax is 7,000, I'd prepay all the 7,000 property tax and leave the 10,000 deduction to be applied to the rest of the property tax and the 2018 income tax.
ps - try paying online. But I don't know it the WEB site has the 2018 tax dues listed.
The other option we were given is to let our mortgage lender know by 8 pm tonight (who have been paying our property taxes out of an escrow) and THEY will pre-pay on our behalf whatever amount we specify for 2018 property taxes before the end of this month. We'd then have the option afterwards of paying whatever additional escrow they require in 12 monthly payments or in other ways (with no interest charged, etc.). My questions:
- If our 2018 property taxes are $23419, should we have them pre-pay $13419?
- They also said they need a set amount of money in escrow of $4700.54 (not sure how that works or if this would change) and that we've already paid in full for all of 2017. If this is the case and we decided to pay them back over 12 payments, how much MORE would we end up paying/month over what we WOULD have been otherwise paying? Thanks for any quick help!
- Alex
1. You can pay Maplewood taxes online by credit card.
2. IRS released guidance this afternoon (Wednesday) on how to handle this. I can't cut and paste on this device. Bottom line for Maplewood is that we will only allowed to deduct paying in 2017 the first 2 quarters of 2018 property tax.
My 2017 taxes are about 13K...Therefore, I'd like to pre pay 3K (the amount over 10K). This is less than one full quarter. Will I be allowed to do this? (Millburn)
I have been told that you can prepay some or all of your real property taxes for 2018. For IRS to accept the deduction in 2017, you need an official assessment of the property for tax purposes and a bill from the municipality to which the taxes will be paid. If your real property is in Maplewood and you do not have all of this documentation, you can get it in the tax collector's office at Town Hall. Possible warning, there was already a line there at 9:00 am this morning when the office opened. Sign of the door reads that they will be closing tomorrow at 12:15 pm.
I just paid my first two quarters online, via credit card, with a hefty transaction fee. WHAT A PLEASURE. Perhaps it will help.
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just got this notice for those in NY State - does NJ have a similar policy or is it futile to try and pre-pay since Congress was supposed to have heartlessly closed this loophole?:
http://mailchi.mp/630217508f5e/keeping-guns-out-of-the-wrong-hands-232805?e=5019706d3a
- Alex