Stopped Check 2018 Property Tax - Etiquette to County?

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arsenalfan
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Stopped Check 2018 Property Tax - Etiquette to County?

Post by arsenalfan » Thu Dec 28, 2017 8:50 pm

I stopped a $15k 2018 property tax check to my county.

Our county hustled to permit people to prepay their 2018 property tax at 2017 appraisal. They issued guidance, which I followed and mailed it in.

Then the IRS issued its directive and the entire county is pretty much example B. The county even specified on its page:

"The IRS issued an Advisory on December 27, 2017, that states, “A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017.” County tax assessments are made each July—the 2018 tax assessment will be made in July 2018. The County continues to advise taxpayers to consult their own tax advisor about the tax consequences of making a prepayment of the taxpayer’s 2018 County real property taxes on their federal income tax return."

While I understand it's a murky grey area, I opted to not take the risk. So I canceled the check via my online banking portal. Eating the $30 fee.

Do I need to contact the County Property Tax Assessor, who presumably is totally swamped already? Will it just bounce, and that's it, do nothing?
Wish I could stroll in and give them a heads-up, but may be a royal pain at this point - especially since tomorrow is last working day in 2017.

Thanks in advance.

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rob
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by rob » Thu Dec 28, 2017 8:57 pm

If the "assessment" is made in July.... Is not the Jan & Apr payments in 2018 already assessed from 2017 and just payable as installment 3 & 4 in 2018. Seems that fits under example A??
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arsenalfan
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by arsenalfan » Thu Dec 28, 2017 9:16 pm

Most accountants and lawyers I consulted said you COULD try for that interpretation, and you PROBABLY wouldn't get audited because it's grey/open to interpretation/etc, but I decided not to push it.

YMMV, and I'm sure many will get away with it. Or not. Just wasn't worth it to me.

dpc
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by dpc » Thu Dec 28, 2017 9:23 pm

Well, the 2018 tax will have to be paid, even if not deductible. I guess I don't see the reason to pay $30 to stop payment.
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by JBTX » Thu Dec 28, 2017 10:29 pm

arsenalfan wrote:
Thu Dec 28, 2017 9:16 pm
Most accountants and lawyers I consulted said you COULD try for that interpretation, and you PROBABLY wouldn't get audited because it's grey/open to interpretation/etc, but I decided not to push it.

YMMV, and I'm sure many will get away with it. Or not. Just wasn't worth it to me.
To each his own, but seems to me if you made a good faith interpretation, I'd run with it, and like you said it isn't likely you will get audited. There is so much confusion on this issue due to the last minute nature of the legislation I'd be surprised if this became a big audit priority. And like others said, presumably you can't deduct in in 2018 anyway, so why stop the transaction?

arsenalfan
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by arsenalfan » Thu Dec 28, 2017 11:08 pm

I have a better job for $15k than a meaningless loan a year ahead of time...but to the original question sounds like everyone would let it ride.

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Watty
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by Watty » Fri Dec 29, 2017 12:09 am

Don't be be surprised if the county adds fees for bouncing the check.

SimonJester
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by SimonJester » Fri Dec 29, 2017 12:12 am

I would get ahold of your county tax assessors office and tell them you wish to cancel the transaction and the check has a stop payment on it. Otherwise it may be returned to the county by their bank and they may charge you a fee.
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123
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by 123 » Fri Dec 29, 2017 12:38 am

If your county is "with it" enough to have that current a web page they likely have an FAQ that includes fees or adjustments that apply if a check is returned (likely doesn't matter is it's due to NSF or other reasons).
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mouses
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by mouses » Fri Dec 29, 2017 12:57 am

I would call them in 2018 when they are not swamped and ask. I imagine that with the volume they have to deal with, you will have to just eat a bounced check fee.

ryman554
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by ryman554 » Fri Dec 29, 2017 1:11 am

Watty wrote:
Fri Dec 29, 2017 12:09 am
Don't be be surprised if the county adds fees for bouncing the check.
yup, and probably a hefty one,too.

bad idea by the op to stop payment. Costs way more than the 6 months or so of interest saved.

arsenalfan
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by arsenalfan » Fri Dec 29, 2017 7:06 am

Ok just called the county: $35 bounce check fee is all. Boo. They said just let it ride.

Hefty lol.

LSLover
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by LSLover » Fri Dec 29, 2017 7:19 am

arsenalfan wrote:
Fri Dec 29, 2017 7:06 am
Ok just called the county: $35 bounce check fee is all. Boo. They said just let it ride.

Hefty lol.
Can you tell us what county is that?

neilpilot
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by neilpilot » Fri Dec 29, 2017 9:41 am

So OP will pay $65 to cancel a property tax payment that would have been a qualified deduction in tax year 2017. :oops:

libralibra
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by libralibra » Fri Dec 29, 2017 12:52 pm

dpc wrote:
Thu Dec 28, 2017 9:23 pm
Well, the 2018 tax will have to be paid, even if not deductible. I guess I don't see the reason to pay $30 to stop payment.
One possible reason is if he thinks he can deduct it on his 2018 fed taxes (up to 10k) as well as his state income tax return. otw, according to the rules, he can't deduct it in either 2017 or 2018 since it breaks one rule or the other:

Tests To Deduct Any Tax
The following two tests must be met for you to deduct any tax.
- The tax must be imposed on you.
- You must pay the tax during your tax year.

arsenalfan
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by arsenalfan » Fri Dec 29, 2017 2:43 pm

Yup. To summarize for those not following: county rushed to make it so you could pay 2018 taxes, based on their estimated 2017 appraisal.

Then IRS issued guidance.

Then county says they can't give advice on tax matters, 2018 tax bills will be coming in July 2018, but hey we'll take your money!

I've already paid my 2017 property taxes. And cannot deduct 2018 property taxes in 2017, as they're not billed/imposed on me yet.

neilpilot and others, why do you think this is a qualified deduction in 2017?

In the good news department, Bank of America says no charge for the stop payment since I've got some kind of status. Little victories.

So basically a $35 lesson (county's bounced check fee) to learn my risk level is low for fudging my taxes. Lesson learned by me - YMMV of course, and I know plenty who are going ahead with this prepayment/deduction because the audit/return payment risk is worth it to them.
Last edited by arsenalfan on Fri Dec 29, 2017 2:47 pm, edited 1 time in total.

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DaftInvestor
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by DaftInvestor » Fri Dec 29, 2017 2:47 pm

Thanks for sharing your story (and summarizing the final demise / price-you-paid).

My town refused to play along with those looking to save a few more dollars on taxes and aren't doing 2018 assessments (or issuing bills) until next month.

Admiral
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by Admiral » Fri Dec 29, 2017 4:00 pm

For others just note (see below) that if your mort holder reports escrow payment for taxes to the IRS (not all do) that you're opening yourself up to possible scrutiny (read: audit) if their records and yours do not match. I really don't think it's worth it. My. $.02

https://www.nytimes.com/2017/12/28/your ... y-tax.html

Good Listener
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by Good Listener » Fri Dec 29, 2017 6:03 pm

Doesn't the county provide some documentation to the IRS and taxpayer of the amount of real estate taxes paid by the taxpayer? If so, wouldnt the computer spit out a mismatch if the IRS instructs the counties on what they can and cannot include?

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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by LarryAllen » Fri Dec 29, 2017 6:13 pm

I am exhausted just reading the thread. I think I would have just paid it, tried to deduct it, and not thought more about it. Odds of audit are low and it's gray area at least. WAY too much work put in here in my opinion.

arsenalfan
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by arsenalfan » Fri Dec 29, 2017 6:14 pm

DaftInvestor, I think your town probably saved you from yourself.
Admiral, I do escrow. It didn't weigh too much into my initial decision to pay - but it would've been another hoop to jump through to get that escrow property tax money back. I don't know if my bank reported to IRS the escrow.
Ultimately it's going to be a personal call on how much possibly saving $x on your taxes by playing in the grey area of ?is it deductible and ?will I get audited. Which is why they shift responsibility to "ask your accountant."

Can't think of a better time to be an accountant!

Larryallen, you need to workout more lol - whole thing took about 15 min of work total time write a check, then to stop a check being paid. :D

Given all my k-1s and other income, saving $4-5k on this "trick" just wasn't worth the hassle of even vaguely increasing my risk of an audit. Friends in IRS and a couple (pretty chill) lawyers recommended I not do it. YMMV. Hey, ask your accountant! :sharebeer

I think this thread is dead, BTW. Let us know if anyone gets audited - or gets away with it! Happy to be wrong.
Last edited by arsenalfan on Fri Dec 29, 2017 6:38 pm, edited 2 times in total.

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whodidntante
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by whodidntante » Fri Dec 29, 2017 6:17 pm

LarryAllen wrote:
Fri Dec 29, 2017 6:13 pm
I am exhausted just reading the thread. I think I would have just paid it, tried to deduct it, and not thought more about it. Odds of audit are low and it's gray area at least. WAY too much work put in here in my opinion.
This is the approach I'm taking. I think my deduction is allowed, and the potential payoff is worth the consequences if it turns out I'm wrong.

Palatineman
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by Palatineman » Fri Dec 29, 2017 7:12 pm

Admiral wrote:
Fri Dec 29, 2017 4:00 pm
For others just note (see below) that if your mort holder reports escrow payment for taxes to the IRS (not all do) that you're opening yourself up to possible scrutiny (read: audit) if their records and yours do not match. I really don't think it's worth it. My. $.02

https://www.nytimes.com/2017/12/28/your ... y-tax.html
I just checked my IRS Wage and Income transcript from 2015. Though the 1098 form sent by the mortgage company indicates how much taxes were paid for the year, the IRS form has no data on this, besides the interest paid for the year.

So my assumption is that Real estate taxes are not recorded by the IRS.

Once again - not a tax attorney or advisor, just going by the information available from the IRS to tax payer.

I prepaid my first installment due in Feb 2018 yesterday as my county sent the assessed bill early - available online and called my mortgage company, who indicated to send the receipt to them prior to Feb, so there is no double payment.

I will be taking the additional deduction on my 2017 return.

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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by ryman554 » Sat Dec 30, 2017 3:05 am

Palatineman wrote:
Fri Dec 29, 2017 7:12 pm
I will be taking the additional deduction on my 2017 return.
And when the irs sees a large lump i property tax deduction in 2017 compared to 2016 and before, don't you think they will flag it? You may or may not be audited, but you just increased you chances of one.

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dodecahedron
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by dodecahedron » Sat Dec 30, 2017 4:56 am

ryman554 wrote:
Sat Dec 30, 2017 3:05 am
Palatineman wrote:
Fri Dec 29, 2017 7:12 pm
I will be taking the additional deduction on my 2017 return.
And when the irs sees a large lump i property tax deduction in 2017 compared to 2016 and before, don't you think they will flag it? You may or may not be audited, but you just increased you chances of one.
Audits aren't exactly fun but an audit like on a tax issue like this is not a particularly big deal. Pretty straightforward to defend. Send in the property tax bill receipts for the year in question (easily obtainable from your town if you have lost your copies) and you are done.

I am sure the IRS encounters lots of folks with significant year over year increases in property tax deductions so I wouldn't assume it is an automatic red flag. Deduction bunching was a longstanding common practice for many folks plus there are many other things that can cause such an increase, such as special assessment property taxes, or people might be paying property taxes on newly acquired investment property (e.g., vacant land) or a vacation home or their home might have been reassessed by local tax authorities.

ryman554
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by ryman554 » Sat Dec 30, 2017 6:45 am

dodecahedron wrote:
Sat Dec 30, 2017 4:56 am
ryman554 wrote:
Sat Dec 30, 2017 3:05 am
Palatineman wrote:
Fri Dec 29, 2017 7:12 pm
I will be taking the additional deduction on my 2017 return.
And when the irs sees a large lump i property tax deduction in 2017 compared to 2016 and before, don't you think they will flag it? You may or may not be audited, but you just increased you chances of one.
Audits aren't exactly fun but an audit like on a tax issue like this is not a particularly big deal. Pretty straightforward to defend. Send in the property tax bill receipts for the year in question (easily obtainable from your town if you have lost your copies) and you are done.

I am sure the IRS encounters lots of folks with significant year over year increases in property tax deductions so I wouldn't assume it is an automatic red flag. Deduction bunching was a longstanding common practice for many folks plus there are many other things that can cause such an increase, such as special assessment property taxes, or people might be paying property taxes on newly acquired investment property (e.g., vacant land) or a vacation home or their home might have been reassessed by local tax authorities.
Oh, I agree that audits are straightforward. And bunching is common.

But for 2017, you can bet that the IRS is watching this deduction like a hawk in a way they didn't in prior years. They went so far as to issue guidance on this point explicitly.

They can wait until 2018 taxes to see the deduction change again and then decide.

Since the OP seems to be taking the position that the IRS disallowed, paying 2018 estimated taxes, not actually levied taxes, then the Audit will likely not be in the OP favor.

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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by neilpilot » Sat Dec 30, 2017 8:35 am

ryman554 wrote:
Sat Dec 30, 2017 6:45 am

Oh, I agree that audits are straightforward. And bunching is common.

But for 2017, you can bet that the IRS is watching this deduction like a hawk in a way they didn't in prior years. They went so far as to issue guidance on this point explicitly.

They can wait until 2018 taxes to see the deduction change again and then decide.

Since the OP seems to be taking the position that the IRS disallowed, paying 2018 estimated taxes, not actually levied taxes, then the Audit will likely not be in the OP favor.
Well I've been "bunching" for 6 years, filing schedule A every other year with 2 years worth of property tax. Still waiting for that audit, which is easily defended if it ever comes.

Based on the messages received from the Trump administration, if anything they plan to further cut the IRS manpower, which is already stripped back from previous years. The IRS has long cautioned that budget cuts hitting the agency in recent years could leave it with fewer agents to catch missteps and collect revenue. The agency has lost more than 17,000 employees since 2010, including 7,000 enforcement agents, the agency said.

I think it's foolish to decide to not take a deduction that's possibly questionable, but clearly defensible.
Last edited by neilpilot on Sat Dec 30, 2017 8:39 am, edited 1 time in total.

Jack FFR1846
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by Jack FFR1846 » Sat Dec 30, 2017 8:38 am

This pre-payment is probably going to be included for half the home owners in America. I'd go with "if you're not audited, it's allowed" and see how it goes.
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mikep
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by mikep » Sat Dec 30, 2017 9:39 am

I would try to stop it. Next year, you may be able to deduct it on state taxes anyway. For me 9.3% of 15K >> $35.

LSLover
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by LSLover » Sat Dec 30, 2017 10:14 am

mikep wrote:
Sat Dec 30, 2017 9:39 am
I would try to stop it. Next year, you may be able to deduct it on state taxes anyway. For me 9.3% of 15K >> $35.
How do you deduct $15K in property taxes if combined limit on property plus state income tax is $10K?

mikep
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by mikep » Sat Dec 30, 2017 10:22 am

LSLover wrote:
Sat Dec 30, 2017 10:14 am
mikep wrote:
Sat Dec 30, 2017 9:39 am
I would try to stop it. Next year, you may be able to deduct it on state taxes anyway. For me 9.3% of 15K >> $35.
How do you deduct $15K in property taxes if combined limit on property plus state income tax is $10K?
As far as I know my state income taxes for 2018 haven't changed, only federal. My state standard deduction is $8258, therefore I should be able to itemize over that with high property taxes like the OP. OP may be able to itemize on the state return even if not federal, depending on the state.

Olemiss540
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by Olemiss540 » Sat Dec 30, 2017 12:12 pm

Jack FFR1846 wrote:
Sat Dec 30, 2017 8:38 am
This pre-payment is probably going to be included for half the home owners in America. I'd go with "if you're not audited, it's allowed" and see how it goes.
Doubtful. News story this morning in our county showed prepayment went from 300 to 3000 residents this year. Huge change, but definately not half of filers thats for sure. Many people I mentioned this to simply said "I am sure my tax guy/gal would have called if that was the case."
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Palatineman
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by Palatineman » Sat Dec 30, 2017 12:43 pm

dodecahedron wrote:
Sat Dec 30, 2017 4:56 am
ryman554 wrote:
Sat Dec 30, 2017 3:05 am
Palatineman wrote:
Fri Dec 29, 2017 7:12 pm
I will be taking the additional deduction on my 2017 return.
And when the irs sees a large lump i property tax deduction in 2017 compared to 2016 and before, don't you think they will flag it? You may or may not be audited, but you just increased you chances of one.
Audits aren't exactly fun but an audit like on a tax issue like this is not a particularly big deal. Pretty straightforward to defend. Send in the property tax bill receipts for the year in question (easily obtainable from your town if you have lost your copies) and you are done.

I am sure the IRS encounters lots of folks with significant year over year increases in property tax deductions so I wouldn't assume it is an automatic red flag. Deduction bunching was a longstanding common practice for many folks plus there are many other things that can cause such an increase, such as special assessment property taxes, or people might be paying property taxes on newly acquired investment property (e.g., vacant land) or a vacation home or their home might have been reassessed by local tax authorities.
Agreed - easily and legally defensible with a simple here is the tax bill from the county assessor and the payment receipt as evidence, if requested. Another note my county assessor is encouraging the early payment and I completed this online without standing in any line at some govt office.

I put my numbers in Turbotax 2017 and the early payment will save me $1100 including Federal and State taxes with minimal effort.

notmyhand
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by notmyhand » Sat Dec 30, 2017 1:05 pm

Are we really claiming that it's okay to prepay not assessed taxes and take the deduction because audits aren't likely? That's like saying I'm going to claim all my commuting mileage even though I know I legally can't claim it because an audit is unlikely. Unless you have a bill in hand you can't claim it. Sucks for us Pennsylvania residents but it is what it is.

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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by dodecahedron » Sat Dec 30, 2017 1:49 pm

notmyhand wrote:
Sat Dec 30, 2017 1:05 pm
Are we really claiming that it's okay to prepay not assessed taxes and take the deduction because audits aren't likely? That's like saying I'm going to claim all my commuting mileage even though I know I legally can't claim it because an audit is unlikely. Unless you have a bill in hand you can't claim it. Sucks for us Pennsylvania residents but it is what it is.
I want to be clear that *I* am not claiming this. My claim is that if YOU do have an actual bill in hand (dated as issued in 2017 and paid in 2017)--as I do, this should an easy and straightforward audit to defend. That said, federal audits are a bit of a hassle under the best of circumstances, due to the difficulty of actually reaching a human being at the other end of the phone who can actually access the documents you have sent in, so I am hopeful I won't have to actually deal with this, even though I am confident my supporting documents would ultimately win out.

I will say that NYS audits are now a relative breeze because taxpayers can upload the supporting documents they submit as a PDF to an online portal. Then both you and the person you are talking to on the phone if necessary can both access your documents and easily straighten out whether anything else is needed. Someday, I hope the IRS will have the funding to implement a similar system.

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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by notmyhand » Sat Dec 30, 2017 1:55 pm

dodecahedron wrote:
Sat Dec 30, 2017 1:49 pm
notmyhand wrote:
Sat Dec 30, 2017 1:05 pm
Are we really claiming that it's okay to prepay not assessed taxes and take the deduction because audits aren't likely? That's like saying I'm going to claim all my commuting mileage even though I know I legally can't claim it because an audit is unlikely. Unless you have a bill in hand you can't claim it. Sucks for us Pennsylvania residents but it is what it is.
I want to be clear that *I* am not claiming this. My claim is that if YOU do have an actual bill in hand (dated as issued in 2017 and paid in 2017)--as I do, this should an easy and straightforward audit to defend. That said, federal audits are a bit of a hassle under the best of circumstances, due to the difficulty of actually reaching a human being at the other end of the phone who can actually access the documents you have sent in, so I am hopeful I won't have to actually deal with this, even though I am confident my supporting documents would ultimately win out.

I will say that NYS audits are now a relative breeze because taxpayers can upload the supporting documents they submit as a PDF to an online portal. Then both you and the person you are talking to on the phone if necessary can both access your documents and easily straighten out whether anything else is needed. Someday, I hope the IRS will have the funding to implement a similar system.
I was not questioning your case. I was questioning the rest of the people who said they would just risk it. You are correct - if you have an assessment and bill in hand, you are good to go. If you do not, then it is not deductible. OP's case is relatively black/white - "Our county hustled to permit people to prepay their 2018 property tax at 2017 appraisal. " 2017 appraisal means 2018 has not been assessed therefore 2018 is not deductible. He even says that his assessed value won't come out until summer 2018.

chicagoan23
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by chicagoan23 » Sat Dec 30, 2017 2:13 pm

notmyhand wrote:
Sat Dec 30, 2017 1:05 pm
Are we really claiming that it's okay to prepay not assessed taxes and take the deduction because audits aren't likely? That's like saying I'm going to claim all my commuting mileage even though I know I legally can't claim it because an audit is unlikely. Unless you have a bill in hand you can't claim it. Sucks for us Pennsylvania residents but it is what it is.
I disagree with this. Having a bill is not the same as an assessment. The assessment process is governed by state law, and for many states the 2017 assessment process is done, with bills to come next year. See: viewtopic.php?t=235874&start=50

notmyhand
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Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by notmyhand » Sat Dec 30, 2017 2:34 pm

chicagoan23 wrote:
Sat Dec 30, 2017 2:13 pm
notmyhand wrote:
Sat Dec 30, 2017 1:05 pm
Are we really claiming that it's okay to prepay not assessed taxes and take the deduction because audits aren't likely? That's like saying I'm going to claim all my commuting mileage even though I know I legally can't claim it because an audit is unlikely. Unless you have a bill in hand you can't claim it. Sucks for us Pennsylvania residents but it is what it is.
I disagree with this. Having a bill is not the same as an assessment. The assessment process is governed by state law, and for many states the 2017 assessment process is done, with bills to come next year. See: viewtopic.php?t=235874&start=50
We're not discussing 2017 taxes. Yes most of those are complete. We are discussing 2018 taxes/assessment. The OP is wanting to prepay 2018 taxes and clearly they are not assessed yet because he says they are prepaying at 2017 levels.

"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."

Source: https://www.irs.gov/newsroom/irs-adviso ... id-in-2017

Even worse, from the thread you quoted -
"
Buffetologist wrote:
Sat Dec 30, 2017 9:32 am
Buffetologist wrote:
Fri Dec 29, 2017 5:12 am
@tfb and @MikeG62, thank you so much for this discussion. I believe you are correct and the citation in the Massachusetts guide I linked makes it crystal clear. There is an article in today's Boston Globe this morning that seems to also agree with you.
Just to close out, for the record, our Town's tax collector told the press that the prepayments that I paid for the 8/1 and 11/1 bills will be held in an escrow account an applied when those taxes get assessed. So that pretty much clarifies that those payments won't be legally deductible and that I'm out about $36 in after tax interest that the money would have earned in my Ally Savings account for 8 and 11 months.
"

libralibra
Posts: 221
Joined: Sat Jul 30, 2011 2:01 pm

Re: Stopped Check 2018 Property Tax - Etiquette to County?

Post by libralibra » Sat Dec 30, 2017 2:49 pm

This latest explanation of holding the funds in "escrow" did immediately raise a new question in my mind. I posted above that a good reason for the OP to cancel his payment was that otw it wouldn't be deductible next year, since he paid in this tax year. But that's already how property taxes work for people who escrow them with their mortgage payment. E.g. they pay a little each month and then in 2018 the payment gets made and that's when the deduction counts (even though some of the payment was made in 2017).

I guess that's a 3rd party escrow account so the county doesn't actually get the payment till 2018, so maybe that is enough to follow the IRS rules (of paying in the right tax year). But in the above case, the county is escrowing the funds themselves - so when was the payment officially made? I.e. will it be deductible in 2018?

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