Release of final tax bill details

[FIRE'd@51]

From what I remember after having read parts of the bill (a week ago) , the $10,000 tax deduction limit includes taxes paid such as property AND state income taxes. If this is correct, then I was always over the limit since I was able to deduct my state taxes paid on my Federal Return.

Am I reading this correctly or did the deduction for deducting state taxes as part of this bucket go away?

You are correct that the 10K includes both property taxes and income taxes. The House bill had limited it to just property taxes. BTW, I assume that the car tax can be included as well since it is a personal property tax based on value.

 

[donheff]

DC says they have completed the 2018 assessment process so our payments can be deducted.

 

[sheehs1]

You are correct that the 10K includes both property taxes and income taxes. The House bill had limited it to just property taxes. BTW, I assume that the car tax can be included as well since it is a personal property tax based on value.

Thanks FIRE'd@51. That what I thought too.

 

[audreyh1]

Isn't there a significant number of people who double up on various deductions every other year? I bet many of them prepaid their property taxes, and it got accepted, and I bet along the way some of them were even audited, and it was allowed.

-ERD50

Just to reiterate - a lot of doubling up was not pre-paying anything. It was paying property taxes assessed in two different years in the same year, and both were billed. Some states don’t require you to pay by the end of the year to avoid penalty, they may have penalty free due dates that extend into the next year. So you can pay prior year’s assessed taxes early in the year, and current year’s assessed taxes late in the same year.

 

[scrabbler1]

Just to reiterate - a lot of doubling up was not pre-paying anything. It was paying property taxes assessed in two different years in the same year, and both were billed. Some states don’t require you to pay by the end of the year to avoid penalty, they may have penalty free due dates that extend into the next year. So you can pay prior year’s assessed taxes early in the year, and current year’s assessed taxes late in the same year.

This "bunching" is what I did with 4th quarter estimated state income taxes a few times over the years. I'd pay the 4th quarter of YEAR-1 in early January and the 4th quarter of YEAR in late December. Because I never paid any estimated state income taxes in the other quarters, that juiced up the "bunching" even more.

 

[ERD50]

DC says they have completed the 2018 assessment process so our payments can be deducted.

Good for you!

I wrote my Lake County, IL treasurer, asking if they could somehow release the 2018 amounts due as being assessed in 2017, but (at least he responded), said there is no way they could do that.

I wrote back, reaffirmed that I don't understand why Lake county can't do what Cook County has done - declare the 1st installment to be equal to last years 1st installment, and payable now (but not due until June as always), and make any adjustment to the 2nd installment. (Cook county actually makes the 1st installment = 55% of last years total, but I'll take the same 50% amount to make it easier for them)

Many, many citizens can save thousands of dollars with this change. And many of us stood in line and jumped through hoops to have the money available. If they make this statement now, they have until June to adjust their systems. We only had a few days to respond to the tax changes.

Why not just make the statement publicly? It doesn't affect anyone who doesn't pre-pay. If it doesn't stand up to the IRS scrutiny, at least they tried. What's the downside?

Maybe they just don't have the authority, I dunno.

-ERD50

 

[ERD50]

Just to reiterate - a lot of doubling up was not pre-paying anything. It was paying property taxes assessed in two different years in the same year, and both were billed. Some states don’t require you to pay by the end of the year to avoid penalty, they may have penalty free due dates that extend into the next year. So you can pay prior year’s assessed taxes early in the year, and current year’s assessed taxes late in the same year.

I understand that you are describing the correct/legal way to do it.

What I was saying was, I bet a a significant number of people have done it 'incorrectly' (prepaying based on an estimate, not a formally released assessment/bill) in the past, and it got accepted, and I bet along the way some of them were even audited, and it was not disallowed.

And I understand that doesn't make it right. But I think it will add to the outrage, and public pressure to accept it as a legitimate deduction. As I said earlier, ignorance of the law is no excuse, but I feel that means laws should be understandable, and not complicated twisted abstractions that a lot of professional accountants got wrong.

Heck, even that IRS statement, released after many people prepaid, did not make it clear that this is the way it always was. It sounds like a new ruling, and many media outlets are reporting it that way.

-ERD50