Prepaid state taxes

[corn18]

TurboTax came online last week for 2017. I put in my data and it showed I would owe $1200 in state tax (no penalties). I normally just let it go and pay it in Apr 2018. Decided to go ahead and send a $1200 estimated payment to Ohio so I can deduct it this year from my federal tax. Might as well lock in a 39.6% ROI on that $1200 this year in case the deduction goes away next year. If it doesn't go away, no harm.

Might make some extra charitable contributions this month as well. Might not be tax deductible next year (won't meet the $24,000 cut off).

Might try to prepay my 2018 property taxes this year as well.

Tom

[sblatner]

I think we are going to do the same on all counts - prepay state tax, prepay charity and property taxes. Course, it could all be for moot if Congress doesn't get anything done.

I'm hoping charity might be separate from the standard deduction. If not, it might hurt a lot of charities if people can't deduct their donations.

[corn18]

I think we are going to do the same on all counts - prepay state tax, prepay charity and property taxes. Course, it could all be for moot if Congress doesn't get anything done.

I'm hoping charity might be separate from the standard deduction. If not, it might hurt a lot of charities if people can't deduct their donations.

I figure there is no downside as my marginal federal tax rate will be the same next year.

You are right about the charitable deduction being at great risk and reducing donations.

[corn18]

Forgot that I will have a balance due on my 2017 local taxes, so I prepaid that as well. $733 saved so far (if the tax bill passes). If I can prepay my property taxes, that's another $3247.

[Gailete]

TurboTax came online last week for 2017. I put in my data and it showed I would owe $1200 in state tax (no penalties). I normally just let it go and pay it in Apr 2018. Decided to go ahead and send a $1200 estimated payment to Ohio so I can deduct it this year from my federal tax. Might as well lock in a 39.6% ROI on that $1200 this year in case the deduction goes away next year. If it doesn't go away, no harm.

Might make some extra charitable contributions this month as well. Might not be tax deductible next year (won't meet the $24,000 cut off).

Might try to prepay my 2018 property taxes this year as well.

Tom

I pay our estimated taxes before Jan 1st as then if we over paid we get the money back and the payment counts on this years taxes. I prepay State and Local taxes. We weren't even required to pay estimated IRS 2017 taxes and with what we took in, I'm glad. I think our liability will be zero this year.

[Gailete]

I haven't been following the tax stuff so far this year. Don't want to read something and not realize it never became a law, but will they be able to go back retroactively to 2017? The tax forms at this point are printed and as we have seen TurboTax is a avilable. For those super quick people that do their taxes on the 1st or 2nd they won't be using a form for the 'new' tax laws.

How would it even be legal to hold people accountable for something that they didn't even know about and wasn't law in say, June 2017?

[corn18]

I haven't been following the tax stuff so far this year. Don't want to read something and not realize it never became a law, but will they be able to go back retroactively to 2017? The tax forms at this point are printed and as we have seen TurboTax is a avilable. For those super quick people that do their taxes on the 1st or 2nd they won't be using a form for the 'new' tax laws.

How would it even be legal to hold people accountable for something that they didn't even know about and wasn't law in say, June 2017?

It will not be retroactive.

The approach I am taking is to maximize my 2017 deductions that MIGHT not be available in 2018.

1. State Taxes: I did my state taxes and owe $1200 for 2017. I normally just pay this in 2018. But I sent them an estimated payment this year for $1200. I can now deduct that $1200 from my 2017 federal taxes. If I waited and paid it in April 2018 like I normally do, then it would be deductible in 2018. But if the tax law changes, I will only be able to deduct a total of $10,000 in state, local and real estate taxes. I'm way over that.

2. Local taxes: I owe $653 for 2017. Same as for state taxes, I made an estimated payment just now and can deduct that from my federal taxes for 2017.

3. Real estate taxes: I am trying to determine if I can pay my real estate taxes that are due next year this year. If I can, then I get the deduction this year.

All of this may be for naught if they don't pass the tax bill. That's ok for me as I have plenty of deductions left for next year to itemize if the law stays the same.

For others, you need to do the math to see if any of this makes sense for you.

[corn18]

Just called the county tax office and I can prepay my real estate taxes this year. Yeah!

[Gailete]

Just called the county tax office and I can prepay my real estate taxes this year. Yeah!

Just make sure if possible that the savings if the law changes is more than the interest you lose by paying this ahead of time. As we have no spare nickels without robbing my stock portfolio, we won't be prepaying much in the next couple weeks, unless all the folks her took up sewing and bought me out. Just joking. Trying hard, but sales are way down from last year’s great sales.

Thank you for clarifying what is happening with the new possible law. I've been seeing some posts that seem like some are running around saying that the sky is falling. I couldn't figure out what the problem is as I was pretty sure it wouldn't be retroactive to this year.

Any place with a readable and understandable article about the new potential changes?

[corn18]

Just make sure if possible that the savings if the law changes is more than the interest you lose by paying this ahead of time. As we have no spare nickels without robbing my stock portfolio, we won't be prepaying much in the next couple weeks, unless all the folks her took up sewing and bought me out. Just joking. Trying hard, but sales are way down from last year’s great sales.

Thank you for clarifying what is happening with the new possible law. I've been seeing some posts that seem like some are running around saying that the sky is falling. I couldn't figure out what the problem is as I was pretty sure it wouldn't be retroactive to this year.

Any place with a readable and understandable article about the new potential changes?

I haven't found a good place to get a readable and understandable outline of everything in the proposed bill. Not sure there is anyone who knows yet.

[LivingAlmostLarge]

I thought they weren't cutting medical expenses and charitable deductions?

[corn18]

I thought they weren't cutting medical expenses and charitable deductions?

No clue on medical. Charitable is still there, but with the Married filing joint standard deduction going to 24k, there will be a lot fewer people itemizing. I might not hit 24k in itemized deductions next year so I won’t be able to deduct charitable.

[sblatner]

I wish they would make charity a separate line item but probably not.