Washington DC, The idea that individuals will skirt new limits on deducting state and local taxes is “ridiculous,” Treasury Secretary Steven Mnuchin said in January, highlighting concerns that people might be able to pay property taxes and claim them as a charitable deduction.
The Secretary continued ,“Let me just say again from a Treasury standpoint and IRS, I don’t want to speculate on what people will do, but I think it’s one of the more ridiculous comments to think you can take a real estate tax that you are required to make and dress that up as a charitable contribution,”
Mnuchin told reporters at the daily White House press briefing. “I hope that the states are more focused on cutting their budgets and giving tax cuts to their people in their states than they are in trying to evade the law.”
In other words, Gov. Murphy wants you to participate in a transparent tax avoidance scheme that will certainly result in you getting fined out of your wazoo by the IRS. How can people justify their vote for this obvious disaster-in-advance? Christie was a complete jerk, but electing someone who will outdo Corzine, McGreevey and him and as a joke is no solution.
Renews Pledge to Preserve Tax Deductions for New Jersey
February 10,2018
the staff of the Ridgewood blog
Marlboro NJ, in what some critics call a last act of a desperate man ,Governor Phil Murphy today called upon mayors to take steps to counteract the effects of the federal tax legislation that gutted New Jersey’s State and Local Tax (SALT) deduction and limited the amount of money state homeowners can deduct from their property taxes.
“When the disastrous federal tax legislation passed, I committed to pushing back and taking steps to ensure that the people of New Jersey are not subjected to unfair double taxation,” Governor Murphy said. “We have begun working with legislative leadership to protect our residents and prevent this plan from further hurting our taxpayers. We must eliminate any and all barriers to creating a system that will provide tax relief to property taxpayers who make charitable contributions to their municipality.”
If the system is implemented, taxpayers can make voluntary contributions to funds that pay for local services like schools, law enforcement, and infrastructure. They will then receive an offsetting tax credit on their property tax bill and contributions will be deductible for federal tax purposes under existing law.
Governor Murphy today was joined by a bipartisan group of mayors who have pledged to allow taxpayers in their towns to make payments to local governments as charitable donations and offset property tax liability. Marlboro Mayor John Hornik, Ocean Township Mayor Christopher Sciciliano, Manasquan Mayor Edward Donovan, Belmar Mayor Matt Doherty, and Aberdeen Mayor Fred Tagliarini pledged to introduce the this plan in their municipalities. They join the mayors of Fair Lawn, Paramus, and Park Ridge who made that pledge in January.
On Thursday, Governor Murphy promised to sign any legislation that reduces existing state roadblocks to municipalities reforming their property tax system to allow for charitable contributions, a system that will preserve local revenues while also providing residents with significant deductibility of their payments from their federal income taxes.
Ridgewood NJ, surprisingly there were actually 66 towns in NJ where property taxes actually went DOWN. According to NJ105 radio , while the Village of Ridgewood had a 2.80% property tax increase from 2016 to 2017.The were however 8 towns in Bergen County that lowered property taxes , none of them bordering Ridgewood.
RIDGEWOOD VILLAGE
2017 avg: $17,667
2016 avg:$17,181
Change: 2.80%
I sent the following letter to The Record the other day about property taxes.
Regarding “Property taxes as charity debated” (Page 1A, January 15″):
The article unwittingly highlights the intellectual confusion – and bankruptcy – of the tax debate in America. First, property taxes are coercive levies on citizens to pay for schools, roads, police and other activities of local governments. In other words, homeowners have no choice but to pay for services they may not want nor “consume” in their local community.
Second, charitable contributions are voluntary payments to organizations that the donor believes is meeting a noble goal. Nonprofit organizations have a long history of serving the needs of people going back to colonial times. It is this ethos that is one of the foundations of America’s experiment as a limited government Republic. However, since the Great Depression the welfare state has expanded exponentially “crowding out” organizations that provided unemployment insurance, life insurance, medical insurance and other vital services for their members before the economy’s implosion in the 1930s.
The new tax law places a $10,000 cap on the amount of property and state and local income taxes taxpayers can deduct on their federal tax return. This restriction obviously increases the federal tax burden of taxpayers who live in New Jersey and other high tax states.
The solution is crystal clear: abolish the federal income tax and have local services paid for just as we pay for cable TV, Internet access, cell phones and other services people want for themselves and their families, by voluntary exchange. This would reduce the vast coercion government exerts over its citizens.
Murray Sabrin Ramapo College Professor of Finance · 1985 to present · Mahwah, New Jersey
The Tax Cuts and Jobs Act signed by President Donald Trump on Dec. 22 now caps the amount of state and local taxes that can be deducted on federal income tax returns at $10,000. In a state where the average homeowner’s yearly property tax bill surpasses that number by almost $8,000, according to the Urban-Brookings Tax Policy Center, residents headed to their local tax offices to try to pay by year’s end and deduct their 2018 property taxes from 2017’s federal taxes.
Ridgewood was not alone ,the Record reported that Montclair, residents jammed the coffers with $28 million and both Tenafly and Wayne saw more than $16 million each in prepayments.
Ridgewood Chief Financial Officer Robert Rooney told the Record that while Ridgewood’s $21.2 million total includes payments dating back to Dec. 1, $19 million of that was received within the last two weeks of the year, and $15 million in the three days after Christmas alone. Rooney added that the total payments in Ridgewood came from 3,500 separate transactions in a municipality where the average property tax bill is $17,180 per year.
IMPORTANT INFORMATION REGARDING PRE-PAYMENT OF REAL ESTATE TAXES
Office hours Monday – Friday 8:30am – 4:30pm
Ridgewood NJ, The Village of Ridgewood Tax Office will accept any regular payment or pre-payment toward real estate taxes.
Your pre-payment of 2018 taxes (or any portion thereof) must be received in this office no later than December 29, 2017. We do not accept postmark.
Payments may be dropped in the yellow mail box marked “Village Mail Only” at the rear entrance of Village Hall.
Neither the Tax Collector nor employees of the tax collector’s office can give information or advice pertaining to the deductibility of any payment of real estate taxes for personal income tax purposes. Residents are encouraged to seek advice from their personal tax professionals on such matters.
If your taxes are paid through your mortgage company, you must contact them first to confirm that they will not also make payment. We have already reported payment amounts due for the February quarter to all of the mortgage companies.
Also, if you should request a refund, we will send you a 1099.
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.
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 AM
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.
Ridgewood NJ, The League, along with a coalition of local government groups have made clear to the Legislature the need to extend the cap on arbitration awards , The league called on local mayors , saying “We know that hundreds of municipalities have publicly called for the extension of the cap, but it is clear we must redouble our efforts to maintain this important protection for property taxpayers”. The law is set to expire in two weeks.
In an analysis of the cap released this fall found it saved taxpayers $530 million on police and firefighter salaries and more broadly found the duo of caps saved taxpayers $2.9 billion.
The expiration date coincides with the expiration of at least 100 public safety municipal contracts, according to the League of Municipalities, and proponents said they would expect unions to quickly file for interest arbitration.
“The conclusions the data supports are undeniable. The arbitration award cap and property tax cap are unseverable and essential policies if we are serious about keeping property tax increases at the historically low rates of the last few years. The data and the report confirm what the laws of mathematics dictated from the start, you can’t have an effective cap on property taxes without an identical cap on arbitration awards. We can’t tell local officials their revenues can only increase by two percent, but that the largest line item in their budgets must increase by three percent or eight percent or any amount higher than the tax cap. And it isn’t just police and firefighter salary costs that are effected, there is a ripple effect throughout all salary expenses.” , Assemblyman Declan O’Scanlon.
The League of Municipalities says that Trenton needs to hear directly from you on the critical need for the common sense extension of the 2% cap on interest arbitration awards. In 32 calendar days the cap will expire along with over a 100 police and fire contracts. With this deadline looming, local officials’ voices must be heard in Trenton. If the cap is not extended it will be local leaders, not the special interest groups or State elected leaders, facing the dilemma of funding an unelected third party arbitrator’s award under the state mandated 2% levy cap.
In addition, to personally contacting your State representatives on the urgent need for the 2% cap on interest arbitration awards, please contact the following:
Senate President Sweeney at 856-251-9801 or [email protected]
Senate Republic Leader Kean at 908-232-3673 or [email protected]
Assembly Speaker Prieto at 201-770-1303 or [email protected]
Assembly Republican Leader Bramnick at 908-232-2073 or [email protected]
Assembly Speaker Elect Coughlin at 732-855-7441 or [email protected]
Governor Christie at 609-292-6000
Governor-Elect Murphy (Transition office) 609- 292-4075
this letter was also published NorthJersey 7:03 a.m. ET Dec. 15, 2017
In regard to the federal tax reform debate, it’s amazing to read the many letters to the editor justifying the deduction of local taxes because New Jersey gets so little back from the U.S. government in comparison to other states. New Jersey’s disgraceful local taxes have nothing to do with the federal government or with the actions of other states and everything to do with the reckless fiscal mismanagement brought about by elected officials of both parties.
We have a pension system that will never be solvent unless it undergoes major reform. We have a public educational system supported by billions of dollars in spending — much of which is siphoned off before it ever gets to the classroom, and thus resulting in a failure of education in our major cities. We have more than 500 municipalities with a duplication of services that’s unique to New Jersey. And we have government workers making salaries and benefits together with retirement packages that are out of control and continue to escalate.
Rather than looking to the federal government for a handout so New Jersey can continue its profligate spending, we should be demanding sound solutions to our fiscal mess from our elected leaders.
Reader said, “Nice to see that ya’ll are finally taking your head out of your asses and realize that you have been getting screwed for years. And James, stop with the Union City crap. It’s getting old. We don’t need “massive upgrades” to anything. Do we need extra capacity to bring the town into the future? Sure. But your doomsday predictions because a few developers understand what the towns future residents want is classic of the Ridgewood NIMBY attitude that keeps anything from moving around here. Including how the municipal govt. works. You want change or will you continue to bitch and moan anytime anyone takes action. We can’t move forward if you insist on remaining in the past.”
Best for you to take your head out of the sand ,
Ridgewood as a nice place to live was virtually destroyed by the prior council or the 3 Amigos. The push to turn Ridgewood into Union city , with high density housing creates a need for massive upgrades of the Village infrastructure . This will take a decade , water, sewer, traffic, schools ,police , fire and so on all need massive taxpayer funded upgrades thanks to the actions of the 3 amigos and Roberta . The Villages ability to increase revenue has also been curtailed by giveaway contracts and bad leases . So no one with any sense will stop blaming the Paul Aronsohn , Gween and Uncle Albert as well as their side kick flunky Roberta
Ridgewood NJ, last night Republicans pushed a nearly $1.5 trillion tax bill through the Senate after a burst of eleventh-hour horse trading, giving President Donald Trump one of his top priorities by Christmas.
Peter Ferrara, a senior fellow at the Heartland Institute, writes in The Daily Caller that 2017’s tax overhaul bill will be comparable to landmark tax legislation passed under President John F. Kennedy in the 1960s and President Ronald Reagan in the 1980s. “Presidents Kennedy and Reagan fundamentally fixed the individual, worker side of the tax code,” Ferrara writes. “This year’s tax reform now focuses on the business side, where the real economic problem lies today.” The lessons from the Reagan-era tax debate are particularly instructive today. “The economy took off on a 25 year boom,” Ferrara says. “Despite those dramatic income tax rate cuts, federal revenues doubled while Reagan was president, because of the booming growth.”
Like the House bill, the Senate bill cuts the current 35 percent rate to 20 percent, but the Senate bill calls for a one-year delay in dropping the rate, cutting the USA’s uncompetitive highest corporate taxes in the world and seen as the key to job growth .
For small business a provisions for “pass-through” businesses shaped up to be one of the greater fights among lawmakers in the tax reform debate.
A pass-through business refers to one that is not a corporation, and therefore isn’t taxed as such. These include sole proprietorships, joint ventures, limited liability companies and S corporations. Millions of American businesses use the pass-through taxation format, where the profits are counted in the owners’ personal tax returns.
The Senate measure would set a new deduction of 17.4 percent for those who qualify for the pass-through taxation. It also makes it easier for taxpayers to obtain this deduction. However, it includes a clause that would sunset this deduction
On the other hand, the House plan would reduce the tax from 39.6 percent to 25 percent. At odds here is which plan provides a greater savings for a greater number of pass-through businesses.
The Senate bill would drop the highest personal income tax rate from 39.6 percent to 38.5 percent. The estate tax levied on a few thousand of the nation’s largest inheritances would be narrowed to affect even fewer.
Deductions for state and local income taxes a big issues in high tax New Jersey and particularly Bergen County , moving expenses and other items would vanish, the standard deduction used by most Americans would nearly double to $12,000 for individuals and $24,000 for couples, and the per-child tax credit would grow.
People would be allowed to deduct up to $10,000 in property taxes another killer in high tax Bergen County .
Bergen County Executive Jim Tedesco , “This legislation is bad for Bergen County, bad for New Jersey, and bad for our country. New Jersey residents already far pay more in taxes to the federal government than we receive in federal funding. Rather than attempting to create more fairness for middle class New Jersey families, this bill eliminates the state and local tax deduction, asking us to contribute more to subsidize tax cuts for the very wealthiest Americans and their heirs. Within our state, Bergen County will be among the hardest hit, and families and small businesses throughout our 70 communities will be hurt by this legislation. It would undermine the strength of our regional economy. I strongly urge New Jersey’s Congressional delegation to unanimously oppose this legislation and work with their colleagues to prevent it from being signed into law.”
Tedesco’s plea clearly a sign that state and county tax collection will be hurt .
The bill would abolish the “Obamacare” requirement that most people buy health coverage or face tax penalties a big plus for lower and middle class working people who’s Obamacare premiums make little economic sense .
The House will vote on a motion to go to conference on the tax bills on Monday evening. The Senate is expected to vote on a similar measure soon after. Congress is scheduled to adjourn for its Christmas break on Dec. 15, but House Speaker Paul Ryan has said he will keep the House in session beyond that date if necessary to get tax reform passed.
The changes will not have any impact on your taxes for 2017, which are due to the IRS by April 17, 2018 (you get an extra 48 hours to file because the traditional April 15 due date falls on a Sunday).
Every senior in town is subsidizing the residents with children in school.
Without exception, every time a senior sells their home it’s purchased by new residents with children in schools.
If the historic trend accelerates (due to expected tax increases because of Governor elect Murphy’s promises ) then our taxes will go up exponentially as seniors move away.
The best way to keep our property taxes to a minimum is to keep our seniors , empty nesters , and those residents without children in the schools.
For the tax dollars the seniors pay they get virtually nothing in return. And do so cheerfully and willingly.
Ridgewood NJ, in the Tax Foundation’s annual comparison of state business climates New Jersey has once again ranked at the bottom of U.S. states as it has since at least 2015.
While neighboring states Delaware 15, Pennsylvania 26, Connecticut 44 , and New York 49.
The think tank ranked New Jersey 36th in unemployment insurance tax, 42nd in corporate business taxes, 46th in sales taxes, 48th in individual income taxes and dead last in number 50 in property taxes.
Joining New Jersey at the bottom of the ranking were New York, California, Vermont, Minnesota, Ohio, Connecticut, Maryland, Louisiana and Rhode Island.
Over two million people left New Jersey between 2005 and 2014, taking billions of dollars in income and economic activity with them, according to a state business group that blames high taxes for the exodus. Is anybody listening ?
