December 22,2017
the staff of the Ridgewood blog
Jersey City NJ, Jersey City today said it will allow residents to prepay their entire 2018 estimated tax bills this year if they want to try to take advantage of a deduction the bill has curtailed.
Property taxes are now entirely deductible, but starting next year taxpayers will only be able to deduct up to $10,000. Residents in high-tax states like New Jersey have been flooding local tax collectors with calls asking to prepay their taxes this year so they can attempt to deduct them when they file their 2017 tax returns in April.
Jersey City had initially said it would cap prepayments of next year’s bill to two quarters , a common limit other New Jersey municipalities have , but Mayor Steve Fulop, a Democrat, said he decided today to allow residents to pay all four quarters this year.
Village of Ridgewood 1st Quarter Preliminary Property Taxes Due February 1, 2018
There is a 10 day grace period. Since the 10th falls on a Saturday and the following Monday is a holiday (Lincoln’s Birthday), payments must be recieved in this office no later than Tuesday, February 13, 2018. Postmark is not accepted. Taxpayers who did not receive a bill last September should contact our office at 201-670-5500 ext 511 or visit our web site at www.ridgewoodnj.net for property tax amounts billed and paid. A reminder to those taxpayers who received added tax bills last October, you will need to pay on the added bill as well as the orignal bill you received in September. As per NJSA 54:4-64 sec.3: “The validity of any tax or assessment, or the time at which it shall be payable, shall not be affected by the failure of a taxpayer to receive a tax bill, but every taxpayer is put on notice to ascertain from the proper offical of the taxing district the amount which may be due for taxes or assessments against him or his property”. Please mail your payments to the Village of Ridgewood Tax Collector, 131 N. Maple Ave., Ridgewood, NJ 07450-3287 or payments may be dropped off in the Village mail box at the rear main entrance. You may also wish to consider enrolling in our ACH program where property tax payments would be automatically deducted from your checking account when due. New enrollments or changes must be received at least two weeks prior to the due date.
We just prepaid our 1st and 2nd quarter 2018 taxes in Ridgewood.
Real estate taxes are not always entirely deductible. If you are subject to AMT the deduction may be limited.
There is a good chance that if you can afford to pay Ridgewood real estate taxes, combined with sky high NJ income taxes, you may be subject to AMT.
Also the ruling is not clear on whether 2018 taxes will be allowed to be deducted in 2017…
ONE INTERPRETATION:
https://www.millarlawoffices.com/warning-pre-paid-state-local-taxes-not-deductible-2017-due-2018/
Warning!!! Pre-paid State and Local Taxes are NOT DEDUCTIBLE in 2017 If they are due in 2018!
By of MillarLaw A Professional Corporation On Sunday, December 17, 2017
Assuming that the Tax Cuts and Jobs Act (“TCJA”) passes both Houses of Congress and is signed by the president, there will be monumental changes in the Internal Revenue Code on the individual and corporate tax levels.
One example is the limitation on the part of individuals to deduct state and local taxes (“SALT”). Prior to the TCJA an individual (including joint return filers) who itemized could deduct state and local taxes to the extent they exceeded to two percent (2%) of Adjusted Gross Income (“AGI”). Under the TCJA an individual is limited to a combined deduction of $5,000 ($10,000 per couple).
Tax advisers have been suggesting that individual taxpayers pre-pay their SALT liabilities for 2018 to overcome the limitation. However, the there is language in the TCJA anticipates and neutralizes that suggestion,
“…an individual may not claim an itemized deduction in 2017 on a pre-payment of income tax for a future taxable year in order to avoid the dollar limitation applicable for taxable years beginning after 2017.” (TCJA, p 558)
Therefore, if you may want to reconsider the suggestion to pre-pay your 2018 SALT liabilities.
Planning note: the TCJA is extremely complex and it requires a lot of careful analysis before meaningful planning steps can be recommended. Please have patience with us and other professionals as we all struggle through the legislation and work toward viable solutions.
ANOTHER OPINION:
https://www.360financialliteracy.org/Topics/Taxes/Credits-Deductions/If-I-prepay-next-year-s-taxes-this-year-can-I-deduct-them-this-year
If I prepay next year’s taxes this year, can I deduct them this year?
Probably. Generally speaking, taxes are deductible in the year you pay them.
Sometimes real estate taxes are prepaid. If you are the property owner, you can generally deduct prepaid real estate taxes in the year of the prepayment if (1) you are a cash basis taxpayer and (2) you don’t live in a jurisdiction where the taxing authority considers prepayment a “deposit.” Jurisdictions vary regarding how they treat prepaid tax. Be aware that taxes placed in escrow generally aren’t deductible until they are paid to the taxing authority.
*As of 12/15/2017, updates to come in 2018.
It all comes down to whether the Village includes any 2018 prepayment taxes in the statement they send you for 2017 taxes paid. If they do, then all’s good. If they don’t, you can’t include them as 2017 taxes paid.
6:45 real estate taxes are NOT income taxes, so the provision you so nicely cut and paste does not apply.
If you are able to deduct your property taxes – it means you are not subject to AMT.
You may not be subject to AMT if
a) Your income is below ~ $150k (married couples). People in this income range rarely itemize, and very few live in high tax NJ towns. So that is not the cohort being helped by this change.
b) You earn more than about $700k (married couples). That puts you in the stratospheric top 0.3% income tax payer range.
Nice to see NJ Democrats bend over backwards to help the 0.3%-ers dodge taxes.
11:06 you seem bitter. Tis the season to be jolly.
I just dropped off my prepayment. It’s worth a shot. We shall see if it works come tax time.
I would like to prepay at least one quarter for 2018 which after all would mean paying it only one month early since it is due Feb. 1 (plus the usual grace period). I wish the town would make it clear whether this would be legal or not. I suppose one could prepay Q1 and find out later (at tax time) whether it was deductible for 2017. If Jersey City can make this decision independently, why can’t Ridgewood? It would have to happen immediately since early payments would have to be made next week. Council, you are on vacation but please help us NOW.