Taxes (GOP 2017 edition)

[Dugout DickStone]

S-canning some W2'ers is a good way to motivate the lazy.   Get motivated people.

[Phil Titola]

Yes, also those bonuses were union negotiated over the summer

These are new bonuses in addition the previously “negotiated” ones.

Are these new cuts or previously negotiated ones?

[K-S-U-Wildcats!]

You have the option to pay 100% in december, or half now and half in april.  Most people escrow and have no clue.

You can also max out contributions to IRA, HSA and any other tax deductible vehicle.

Don't escrow accounts pay at the earliest for full discount? Every loan I've had was that way.

I escrow and, evidently not. I checked and only a 50% payment was made in Dec. I'm going to prepay the rest this week.

Ouch. I'd make that a permanent thing if you get a discount for payment in December.

At least in Sedgwick County, there is no discount for paying lump sum. She made it sound like a state law that the tax is due 100% on November 1, but can be paid 50/50 in December and May without penalty.

Now for the kicker: she thinks I can also prepay my 2018 property tax. So the question is whether the law and regs are sloppy enough to allow me to deduct a prepayment of 2018 property taxes in 2017....

[Dugout DickStone]

Isn't the deduction still allowed but capped at $10k?  In which case, no way anyone in SG county not named Koch is going over that

[K-S-U-Wildcats!]

Isn't the deduction still allowed but capped at $10k?  In which case, no way anyone in SG county not named Koch is going over that

In 2018, you will be able to deduct up to $10,000 in SALT or property tax (or maybe a combination of both  - not sure). But the standard deduction will be doubled to $24,000 for married couples. So once you shrink the SALT deduction and double the standard deduction, there will no longer be any reason for me and a great many people to itemize. Which means that the property tax deduction is only valuable to us in 2017.

Based upon what I'm reading, the law does allow you to deduct, in the 2017 tax year, prepaid 2018 property tax as long as it is paid in 2017. The only downsides are (1) stroking a big check that would otherwise be paid more gradually through your mortgage payments, and (2) if you move in 2018, you've paid the next owner's taxes for whatever portion of the year they own the home.

But those are small downsides to getting a deduction worth hundreds if not thousands of dollars. So if you fall in the above camp and 2017 is the last year the property tax deduction is valuable to you, you ought to look into prepaying 2018 taxes now.

And no, you can't do this for state income tax - that is prohibited by the law.

[Dugout DickStone]

Why not prepay '19 too?

[K-S-U-Wildcats!]

Why not prepay '19 too?

If your county will accept the payment, go nuts. That’s too big a check for me, and I don’t know that we won’t upgrade in house before then.

[Dugout DickStone]

Well I have to get my people on the blower to see if I can pre pay for investment property

[steve dave]

I pay $8k a year in property taxes and I don't live in a Koch mansion. NE property tax is like the worst in the country.

[K-S-U-Wildcats!]

I pay $8k a year in property taxes and I don't live in a Koch mansion. NE property tax is like the worst in the country.

NE a lot of stuff is like the worst in the country. Ts and Ps.

[The Big Train]

I pay $8k a year in property taxes and I don't live in a Koch mansion. NE property tax is like the worst in the country.

That’s like half a Bitcoin

[Dugout DickStone]

I pay $8k a year in property taxes and I don't live in a Koch mansion. NE property tax is like the worst in the country.

still under the limit tho!

[catastrophe]

Texas is bad for property tax, but that’s the cost of no income tax.

[steve dave]

Texas is bad for property tax, but that’s the cost of no income tax.

Ours is no tax on groceries :gianthonkoffhandmotion:


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[Institutional Control]

 No tax on groceries in Texas either. In 2016 I paid $14k in property taxes.


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[wetwillie]

How emasculated does SD feel right now...

[steve dave]

No tax on groceries in Texas either. In 2016 I paid $14k in property taxes.


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GTFOOH you no state income tax paying dork. But yeah, TX has very high prop tax

https://taxfoundation.org/how-high-are-property-taxes-your-state/

[Institutional Control]

No tax on groceries in Texas either. In 2016 I paid $14k in property taxes.


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GTFOOH you no state income tax paying dork. But yeah, TX has very high prop tax

https://taxfoundation.org/how-high-are-property-taxes-your-state/

And every new freeway built in Texas is a toll road. I was paying $160 a month in toll’s before moving to FL.

I guess FL makes all their money off of hotel taxes because property taxes are low.


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[star seed 7]

No tax on groceries in Texas either. In 2016 I paid $14k in property taxes.


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GTFOOH you no state income tax paying dork. But yeah, TX has very high prop tax

https://taxfoundation.org/how-high-are-property-taxes-your-state/

And every new freeway built in Texas is a toll road. I was paying $160 a month in toll’s before moving to FL.

I guess FL makes all their money off of hotel taxes because property taxes are low.


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Damn, sd can't catch a break

[IPA4Me]

No tax on groceries in Texas either. In 2016 I paid $14k in property taxes.


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GTFOOH you no state income tax paying dork. But yeah, TX has very high prop tax

https://taxfoundation.org/how-high-are-property-taxes-your-state/

And every new freeway built in Texas is a toll road. I was paying $160 a month in toll’s before moving to FL.

I guess FL makes all their money off of hotel taxes because property taxes are low.


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Damn, sd can't catch a break

That's why told SD the move to Florida would be a quick ROI. Low taxes plus low admission fees.

[IPA4Me]

Isn't the deduction still allowed but capped at $10k?  In which case, no way anyone in SG county not named Koch is going over that

In 2018, you will be able to deduct up to $10,000 in SALT or property tax (or maybe a combination of both  - not sure). But the standard deduction will be doubled to $24,000 for married couples. So once you shrink the SALT deduction and double the standard deduction, there will no longer be any reason for me and a great many people to itemize. Which means that the property tax deduction is only valuable to us in 2017.

Based upon what I'm reading, the law does allow you to deduct, in the 2017 tax year, prepaid 2018 property tax as long as it is paid in 2017. The only downsides are (1) stroking a big check that would otherwise be paid more gradually through your mortgage payments, and (2) if you move in 2018, you've paid the next owner's taxes for whatever portion of the year they own the home.

But those are small downsides to getting a deduction worth hundreds if not thousands of dollars. So if you fall in the above camp and 2017 is the last year the property tax deduction is valuable to you, you ought to look into prepaying 2018 taxes now.

And no, you can't do this for state income tax - that is prohibited by the law.

Ruh roh...

https://www.washingtonpost.com/news/wonk/wp/2017/12/27/irs-says-taxpayers-trying-to-use-deduction-that-will-be-scaled-back-can-prepay-2018-property-taxes-only-under-limited-circumstances

[The Big Train]

 

[K-S-U-Wildcats!]

Thanks for letting us know. Glad I only paid up my 2017 and didn’t prepay 2018 yet.

[steve dave]

people who may not understand property taxes may not be aware that you pay your 2017 taxes in 2018 (march and july). I just paid all of mine as well ksu-dub. so I'll deduct 2016 and 2017 on this coming return.

[hjfklmor]

Rev. Rul. 82-208 prevents a cash basis taxpayer (i.e. individuals) from deducting state tax payments when, on the date of the payment, you couldn't reasonably determine the amount of the tax - so paying a 2018 state tax estimate would not be allowed since you don't technically know your income for 2018 on which to base that estimate. The same logic could be extended to real estate and property taxes since technically they haven't been assessed yet. Your tax adviser should have warned you about trying to prepay years in advance.