Anybody Else Paying Their 2017 2nd Installment Early Due To Law Change?

Economy & Finance
1

My IRS buddy just reminded me to pay my 2nd installment early since the new law will impact me (combined is already a tad over 10K). Anybody else reaching for their wallet early???

2

I don’t get it.
I think the new law combines CA income tax/sales tax/property tax to max 10k,
So if you pay now let’s say both property tax payment 12k property tax(6k each), wouldn’t that still max out at 10k?

3

No brainer, just pay early. Can’t hurt, but useless if you need to pay amt.

New law starts for 2018

4

I am paying them early. I can itemize this year’s taxes but I will not be able to next year. A married couple with grown children has to hit 24k in deductions next year before you can itemize and we won’t make it. Thar’s a side effect of doubling the standard deduction and eliminating the exemptions.

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5

The thinking is that if you pay your 2nd installment for 2017 now (not in April, 2018), then in theory you only have the first payment of 2018 in tax year 2018 and thus would be under the 10K and would have some leeway to reach 10K with the other stuff. If you pay the amounts normally you potentially could max out on the property tax alone or exceed the 10k max. I believe I am clear on this, but if not, others can chime in.

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6

Thanks for reminding me of this.
I am going to pay it today.

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7

But with CA income tax, everyone will be over 10k easily

8

Perhaps, again your mileage may vary…

9

Law starts next year. For those who itemized deduction, paying this year can deduct full amount of property tax.
Only one-time “tax saving”. Subsequently subjected to new tax law.

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10

My IRS buddy recommends that I go down there in person to pay so that you get a receipt with the date stamp of 2017. I would think just having the date stamp via post office visit would be sufficient as well but you never know.

11

Thank you Sir for the more comprehensive response!!!

12

I just paid online using e-check at SCC website.
Wouldn’t it work?

13

Thanks, i just paid via echeck. no really a big deal paying early or late.

14

Um… paying early does not work for me. You are incurring the opportunity cost with that amount invested elsewhere for 4 months.

15

OK kids, I see you are so happy to bend over for the new tax reform. :laughing::laughing::laughing:

But you will be able to…the postal card thingy…:laughing::laughing::laughing:

16

This is ONLY for the property tax amount above $10K for 2018 right? SALT obviously cannot be prepaid…?

Quick rough example trying to understand:
Say someone net tax rate is 28%.
If their property tax is $20K(@ 1.75M county assessed home price) for 2018, their saving will be $10k*0.28= 2800 ?

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17

Oh, presumably yes. I am still in snail mail mode…(blame our Fearless Leader!!!)

18

It’s total state and local tax limit of $10k. I’d bet a lot of people will hit that with just state income tax. If they do, then they’ll be able to deduct $0 of property taxes next year.

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19

The law specifically excludes paying property tax early

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20

Many Bay Area homeowners are rushing to pay their spring property tax installments in an attempt to squeeze a last deduction in this year before the GOP tax plan takes effect. But there’s still a lot of confusion over what taxpayers can pay in advance and what they can’t.

Here’s the short form: You can’t pre-pay your 2018 state income or property taxes. But you can pay the LAST installments of your 2017 taxes — which are not due until next year — before 2018. If you itemize, doing so could save you big money on your federal tax bill this year.

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