Broker Check

Update on tax planning advice

| December 29, 2017
Share |

A few last minute (really last minute) thoughts on tax planning for 2018. 

Prepaying Property Taxes.  I had recommended in a previous post how most taxpayers – namely those who have property tax bills over $10,000 per year, as well as those who will no longer be itemizing under the new tax bill, could benefit from prepaying their property tax bills before the end of 2018.  A few caveats as I worked through over the last few days.

First, I don’t think its worth trying to prepay if your taxes are paid by your mortgage company.  There is too much risk of creating an administrative mess with both your mortgage escrow account and the tax office. 

Second, it is possible that prepaying your property tax will provide little or no benefit if it will leave you subject to Alternative Minimum Tax.  If you were subject to AMT last year, you will probably receive no benefit.   It won’t be likely to hurt you – but it may not be worth the effort expended). 

Third, in New Jersey property tax bills run from July 1 to June 30.  You can thus prepay only the first 2 quarters of tax.  The IRS will only allow deduction of taxes that have already been assessed, so going beyond the first 2 quarters is not permitted.  

Share |