Across North Texas, county tax offices have been fielding calls from tax payers who want to know if it’s possible to prepay 2018 property taxes in hopes of deducting those payments from their 2017 federal income returns.
The reason for the rush is the new tax overhaul signed by President Trump last week. Under the new federal tax overhaul which takes effect in the New Year, deductible state and local taxes will be capped at $10,000 which has some asking if they can pay future property taxes now and take the deduction.
Experts have agreed it wouldn’t make sense for everyone, the right answer depends on your tax bracket and other factors. In addition to that, the IRS has published a new statement saying prepaid property taxes can only be deducted if the local jurisdiction has completed assessments. Deductions based on future estimated property taxes would not be allowed.
The latest news from around North Texas.
In Collin County, for example, the tax offices have been busy with taxpayers asking about prepayment options. The tax assessor is accepting prepayments, allowing people to pay 2018 taxes based on the 2017 rate – understanding the tax bill would have to be adjusted after the next assessment. Some may still owe more or would be entitled to a refund.
The IRS’s statement on Wednesday afternoon says prepayments on estimated taxes would not count as an acceptable deduction on a 2017 federal income tax return. However, payments for the 2017 property tax bill made by the end of the year would count towards a deduction.
Read the full IRS statement: