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Ridgewood Residents subject to the AMT, prepaid real estate taxes paid will not reduce your federal income tax at all as for AMT purposes

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December 26,2017

the staff of the Ridgewood blog

Ridgewood NJ, Under the new tax bill, deductions for property tax payments and other so-called SALT deductions will be limited to $10,000. That’s going to hurt in Ridgewood and most of New Jersey.
The decision to prepay your Feb. 1, 2018 real estate tax bill by the end of December is predicated on whether you are subject to the Alternative Minimum Tax (AMT)for 2017, said Neil Becourtney, a certified public accountant and tax partner with CohnReznick in Eatontown.
“If you are subject to the AMT, then any additional real estate taxes paid will not reduce your federal income tax at all as for AMT purposes, real estate taxes are not allowed,” Becourtney said.
He said the additional real estate tax payment will lower your regular tax, but the AMT liability will be unchanged — thus your tax liability will be unchanged as you pay the higher of the regular tax or the AMT.
The AMT is quite complex, Becourtney said.
If you were subject to the AMT for 2016 and your overall income and deductions are comparable for 2017, you are probably going to be to AMT again, he said.

7 thoughts on “Ridgewood Residents subject to the AMT, prepaid real estate taxes paid will not reduce your federal income tax at all as for AMT purposes

  1. There are only two deductions applicable against AMT – mortgage interest and charity. Nothing else counts.

    People subject to AMT never for the property tax deduction to begin with. The only people who got that deduction were those earning close to a million dollars or more.

  2. 11:58 you simply don’t know what you are talking about.

  3. Ummm… Property tax deduction does NOT apply, if one if subject to AMT.

  4. 2:10 you are correct and additionally your state income taxes are not deductible to the extent you are subject to AMT.

  5. LOL 11:58 it sounds like you went to the Don Lemon Scool of Class Warfare and Accounting. With mis-informed know-it-all’s like this we can’t wonder why Ridgewood votes the ridiculous way it does.

  6. 7:42 good comment.
    In 2014 (latest data available) top 50% paid 97.25% of federal income taxes, bottom 50% paid 2.75% of federal income taxes.
    Yet the left complains.

  7. …lots of morons were lined up in town hall paying a years worth of taxes without ever consulting their accountants or knowing how it will impact (negatively or positively) their taxes for 2017 (or 2018).
    There were some people who knew exactly what they wanted to achieve and were strategically pre-paying, but there were lots of FOMO lemmings out there throwing money at the tax collector.
    .
    Don’t believe me, go to the tax collector on the 3rd floor of town hall tomorrow and Friday and survey the people… most do not know exactly how much they should pre-pay to achieve a specific desired effect… most are just panic pre-paying on the basis of what they read online or what a friend’s friend told them they should be doing.
    .

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