NY trying to help with 2018 property taxes being paid in 2017

[easytax]

Executive Order signed 12/22 allows 2018 property tax prepayment Governor Andrew M. Cuomo has signed an emergency Executive Order that will allow New Yorkers to prepay next year’s property taxes this year, before the new tax law takes effect. Payments must be postmarked by December 31, 2017. For more information, contact the tax collector for each client's county.  The order authorizes localities to issue warrants for the collection of early property tax payments and to accept partial payment—allowing New Yorkers to pay a portion or all of their 2018 property taxes before the end of the year to keep the deductibility.  Who to contact regarding prepayment eligibility   Check with each client's tax receiver to see if your clients are eligible to make an early payment. The deadline is December 31, so you must act quickly.  Deadline for prepayment  Payments made by mail and postmarked on or before December 31, 2017, will be considered timely. If their county accepts online payments, your clients may pay online until 11:59 p.m., Sunday, December 31, 2017.   For more information, see Executive Order #172.

[Pacun]

This is a no brainer for NY.

I also will sign an executive order Next December and allow all my clients to prepay their tax services between December 5th, 2018 until December 20th, 2018 so I have money for a nice Christmas.

 

[Lee B]

Funny, one of the planning tips I have read about recently was to have your clients prepay their 2017 tax year preparation fees, since misc itemized deductions will be no more.

[Lee B]

The IRS has just released this Tax Advisory which limits this strategy:

IRS Advisory: Prepaid Real Property Taxes May Be Deductible in 2017 if Assessed and Paid in 2017

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The Internal Revenue Service advised tax professionals and taxpayers today that pre-paying 2018 state and local real property taxes in 2017 may be tax deductible under certain circumstances. 

The IRS has received a number of questions from the tax community concerning the deductibility of prepaid real property taxes. In general, whether a taxpayer is allowed a deduction for the prepayment of state or local real property taxes in 2017 depends on whether the taxpayer makes the payment in 2017 and the real property taxes are assessed prior to 2018.  A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017.  State or local law determines whether and when a property tax is assessed, which is generally when the taxpayer becomes liable for the property tax imposed. 

 

The following examples illustrate these points.

 

Example 1:  Assume County A assesses property tax on July 1, 2017 for the period July 1, 2017 – June 30, 2018.  On July 31, 2017, County A sends notices to residents notifying them of the assessment and billing the property tax in two installments with the first installment due Sept. 30, 2017 and the second installment due Jan. 31, 2018.   Assuming taxpayer has paid the first installment in 2017, the taxpayer may choose to pay the second installment on Dec. 31, 2017, and may claim a deduction for this prepayment on the taxpayer’s 2017 return.  

 

Example 2:  County B also assesses and bills its residents for property taxes on July 1, 2017, for the period July 1, 2017 – June 30, 2018.  County B intends to make the usual assessment in July 2018 for the period July 1, 2018 – June 30, 2019.  However, because county residents wish to prepay their 2018-2019 property taxes in 2017, County B has revised its computer systems to accept prepayment of property taxes for the 2018-2019 property tax year.  Taxpayers who prepay their 2018-2019 property taxes in 2017 will not be allowed to deduct the prepayment on their federal tax returns because the county will not assess the property tax for the 2018-2019 tax year until July 1, 2018.