Taxpayers are lining up by the thousands to prepay their property taxes before thein the New Year. Starting Jan. 1, state and local tax deductions will be capped at $10,000. Will it be worth it for you to prepay your 2018 property taxes this week, before the 2017 tax year ends, to maximize the higher deduction threshhold still in place for this year's taxes?
CBS News business analyst Jill Schlesinger said the big question you have to ask yourself -- and answer -- before this weekend's Dec. 31 deadline is, "Will I be an itemizer next year, or will I claim that nearly-doubled standard deduction?"
"If you're going to be an itemizer next year, [claiming] more than the $24,000 level [standard deduction allowed per couple], then you look and say, 'Okay, now am I actually looking at those [local tax] deductions totaling more than $10,000 total?' Again, it's state and local income tax as well as your property tax. Now, that doesn't leave a ton of people, but there are some high-tax states where you might fall into that," Schlesinger said Thursday on "CBS This Morning."
If that's the case and you want the prepay property taxes, Schlesinger warned that it could thrust you into an "alternative minimum tax scenario where you might not actually see the benefit." She also said the IRS released guidance on Wednesday "which said that property tax had to have been assessed and billed for you to prepay."
"A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017," the IRS released in an advisory.
"So, lots of caveats," Schlesinger said, adding, " If your accountant is still in town, give him or her a call. Because it is so confusing, honestly."