Consider prepaying your real estate taxes for next year
The Republican tax plan has been passed by the House and Senate and is heading to the President for signature.
For taxpayers who itemize their deductions, that could mean an increased tax bill in 2018. Also, due to the increase in the Standard Deduction to $24,000 (married couples filing jointly), $18,000 (heads of households), and $12,000 (singles and married couples filing separately) in 2018, many taxpayers who have itemized deductions in the past will no longer need to do so.
But there are some things you can do now to prepare for the changes, including maximizing your 2017 tax deductions.
Homeowners who are not subject to alternative minimum tax (AMT) — could save more money by paying next year’s real estate tax bill by December 31. That way, you can get the deduction for that payment when you file your 2017 taxes. To get the property tax deduction, you have to itemize your deductions
Deducting the full amount of your current real estate tax bill in 2017 might provide an even larger tax benefit if your tax rate goes down next year under the new plan.
How do I pre-pay real estate taxes?
Real estate taxes are administered on a local level, so to pay early, you’ll have to check with your county to see how to do so. You will need to have your Permanent Index Number (PIN).
- Cook County allows estimated prepayment of 55% of the prior year’s total tax. Click here to generate a .pdf tax bill or to pay online. https://www.cookcountytreasurer.com/prepayment.aspx
- Lake County allows estimated prepayment of up to 100% of the prior year’s total tax. Prepayments must be made by mail, an on-line option is not available. http://www.lakecountyil.gov/539/Pre-Payments
- McHenry, IL. https://www.co.mchenry.il.us/county-government/departments-j-z/treasurer/advance-tax
- DuPage, IL. https://www.dupageco.org/Treasurer/1831/
Keep in mind that if you own a home, your mortgage lender might pay your real estate taxes from an escrow account.
Unfortunately, you can’t pre-pay SALT anymore
Some taxpayers may have been considering prepaying their 2018 state and local income tax liability this year to maximize that deduction as well.
But that’s no longer possible: A last-minute provision in the Tax Cuts and Jobs Act says that state and local income taxes paid for any tax year beginning in 2018 will not be deductible on your 2017 taxes.
You can, however, Pre-Pay any Taxes Due for the 2017 filing year – or any taxes due from previous years – and deduct them on your tax return this April.
Any advice depends on your specific situation. If you have any questions or concerns regarding whether or not the above strategies will benefit you, please contact your Warady & Davis LLP advisor at (847) 267-9600.
READ MORE – the Tax Cuts and Jobs Act