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Howard

Save $1,000 or more, but you need to act by year end

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So as we all know, or should know, your SALT deductions will be capped starting next year at $10,000 max.  Many may not even be able to take any deduction if they take the new $24,000 standard deduction for a married couple.  BUT if you act before the end of the year you could save big.  The Feds were smart enough to put in the bill that you could not prepay your state income taxes to get a deduction this year for next years taxes.  They were not quite that smart about property taxes.  If you have already received a bill for property taxes you can pay them and take a deduction this year.  Since NJ has sends out the tax bill mid year you already have the bill and coupons for your first quarter and second quarter 2018 property taxes.  If you pre-pay them before year end you can deduct those two 2018 property tax bills this year, even though you would not be able to do so next year due to being over the $10,000 limit.  So let's say those two bills come to $5,000 and you are in the 28% bracket, doing this will put $1,400 in your pocket.  This may not apply if you are subject to AMT.

 

**** Please note I am not an accountant, have not played one on TV, and have not recently stayed in a Holiday Inn Express - so take free advice for what it might be worth :)

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Call your town office, mine only allows me to pay the first quarter 


Interesting, I don’t think it is up to the town. Those are actually issues by the state, I believe, and also have the county tax built into them.

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45 minutes ago, Golf battery said:

So.  For us common folk.  Please explain what a salt deduction is.  Gracias

SALT= State and Local Tax.

If you itemize you federal tax return, you used to be able to ducted all your state income tax and local tax (some states have county, municipality tax...). I think states that don't have state income tax you could deduct your sales tax.

In 2018 your SALT deduction is capped at 10K. However your standard deduction-assuming married filling jointly-goes up to 24K. 

Something like 70% of the taxpayers used to take the standard deduction anyway instead of itemizing. So this increase in the standard deduction -and the lowering of the marginal tax rates- will save them some money.

This is why about 84% of taxpayers will see their overall tax bill reduced. But you would never guess it if listen to the talking heads or to the man on the street.

TAX CUTS FOR THE MILLIONAIRES AND BILLIONAIRES!!!!111!!!! REEEEE....

 

 

 

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1 hour ago, louu said:

Wish you guys were speaking English, sound like I can get some money somehow. 

 

My taxes get paid by the bank with the mortgage so I have no idea what happens or when. 

Your tax get paid from your escrow account you have your mortgage company. Your town sets the quarterly payment schedule. Mine are due on the first day of February, May, August and November.

You town's website should have the schedule posted. In addition, you should have gotten a notice every year with the schedule.

http://www.businessinsider.com/prepay-property-taxes-before-trump-tax-plan-passes-2017-12

 

 

 

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9 hours ago, Howard said:

 


Interesting, I don’t think it is up to the town. Those are actually issues by the state, I believe, and also have the county tax built into them.

 

Local property tax is jurisdiction of town, city, township.  State, Sweeney, wants them to consider allowing this.  Montville Twp will take 2 quartered because of the way they bill.  A lot of towns do that because they revise 1st half of following year.  

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Question : if the married jointly deduction is $24K then what is the deduction if filing single ? Anyone know ? TIA and Merry Christmas. 


My guess is half that amount but a quick Google search would give the answer.

For those that have a mortal age company Pay things you could just make the extra payment yourself and then provide them proof. You could also give them the money and instruct them to make the payment but there might not be enough time to do that at this point.

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This just came in my email this morning from the local electronic "newspaper" about what our town says about this:

https://www.tapinto.net/towns/randolph/articles/pre-payment-of-2018-randolph-property-taxes-being

 

Pre-Payment of 2018 Randolph Property Taxes being Accepted

By RANDOLPH TOWNSHIP

December 23, 2017 at 7:12 PM

 
best_crop_0042466af1e98837adfc_Randolphlogo@2x.jpg
 
 
 
 
 

RANDOLPH, NJ- In light of the sweeping tax overhaul approved by the U.S. Congress earlier this week, the township has received multiple inquiries as to whether property owners would be permitted to pre-pay their 2018 estimated taxes on or before the end of 2017.

The township is able to accept a pre-payment of the first and second quarters of a property owner’s 2018 estimated property taxes. All payments must physically be in the tax office on or before close of business on Friday, December 29, 2017.

If you have a mortgage company that escrows and pays on your behalf, you must consult with them to prevent the duplication of payment(s). Please note that the township cannot provide tax advice and we encourage property owners to consult with their licensed tax professionals as whether a pre-payment of taxes is advisable or not.

 
 
 

 

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so correct me if I'm wrong but it would only benefit to pre-pay the amount of 2018's taxes that are over 10K?


Not exactly. For 2018, if you itemize, the total you will be able to deduct for all state and local income taxes AND property taxes and sales taxes will be $10,000. So you if you itemize anything over $10,000 is worthless for next year. Also you may not be itemizing in the future due to the standard deduction goingnup to $24,000 for couples.

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59 minutes ago, Howard said:

 


Not exactly. For 2018, if you itemize, the total you will be able to deduct for all state and local income taxes AND property taxes and sales taxes will be $10,000. So you if you itemize anything over $10,000 is worthless for next year. Also you may not be itemizing in the future due to the standard deduction goingnup to $24,000 for couples.

 

thanx, I should have said in regards to prop taxes only & not other SALT itemizing. but i think you still answered that for 2017 only it is better to prepay 2018 prop taxes that are in excess of 10K?

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This is really good advice.   In a nutshell you are trying to get more refund back of your 2017 by prepaying 2018 taxes.  Those who pay more than $10k in property taxes and income taxes in 2018 will get “less” deduction in taxes (but still probably do better in 2018 anyway)

this stratgy only works for 2017 if you choose to submit itemized deductions in 2017 versus standard deduction.   AND you are not subject to AMT.    I’ve said this before you really should examine your filing to see if you are AMT.   I wish I knew what line number it is.  

But nevertheless you need like several thousand laying around to prepay these taxes to get that “savings”.  But Howard is exactly right. Yiu are “earning”. 29% on that money you prepay 

Other great advice.   Own ETFs instead of mutual funds (better cap gains taxes) and done own bonds in a taxable account.  Only tax deferred accounts.   (Bond inxome is taxes at your highest marginal bracket is robbery)

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14 hours ago, Bklynracer said:

Call your town office, mine only allows me to pay the first quarter 

Same here. However that may change due to the current political environment. FYI Jersey CIty Mayor Full-Flop just announced acceptance of prepaying entire 2018 property taxes:

http://www.nj.com/hudson/index.ssf/2017/12/jersey_city_to_allow_residents_to_prepay_2018_taxe.html

Tax experts told The Jersey Journal it's not clear the IRS will allow filers to prepay an entire year's worth of property taxes and then deduct them in April. The bill does specifically bar filers from deducting prepaid state income taxes.

Rachael Bell, spokeswoman for the New Jersey Society of CPAs, told The Jersey Journal filers can prepay at least the first two quarters of their 2018 property tax bill and deduct it when they file in April.

"Taxpayers need to make sure that they are not subject to the alternative minimum tax, which would negate any benefit of prepaying," Bell said. "Additionally, it's possible that Congress could act in the coming weeks to retroactively disallow prepayment."

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Same here. However that may change due to the current political environment. FYI Jersey CIty Mayor Full-Flop just announced acceptance of prepaying entire 2018 property taxes:
http://www.nj.com/hudson/index.ssf/2017/12/jersey_city_to_allow_residents_to_prepay_2018_taxe.html
Tax experts told The Jersey Journal it's not clear the IRS will allow filers to prepay an entire year's worth of property taxes and then deduct them in April. The bill does specifically bar filers from deducting prepaid state income taxes.

Rachael Bell, spokeswoman for the New Jersey Society of CPAs, told The Jersey Journal filers can prepay at least the first two quarters of their 2018 property tax bill and deduct it when they file in April.

"Taxpayers need to make sure that they are not subject to the alternative minimum tax, which would negate any benefit of prepaying," Bell said. "Additionally, it's possible that Congress could act in the coming weeks to retroactively disallow prepayment."



All true except for the last part. Any change would require 60 votes in the Senate and the Dems are not about to bail out the Republicans on any changes. What it is it is at this point.

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On 12/24/2017 at 1:24 AM, WP22 said:

Your tax get paid from your escrow account you have your mortgage company. Your town sets the quarterly payment schedule. Mine are due on the first day of February, May, August and November.

You town's website should have the schedule posted. In addition, you should have gotten a notice every year with the schedule.

http://www.businessinsider.com/prepay-property-taxes-before-trump-tax-plan-passes-2017-12


 

At the end of the above linked article it says below.  So can you still prepay some of next year's 2018 tax bill and deduct it from your 2017 taxes?  Or is that null and void?  

 

Unfortunately, you can't pre-pay SALT anymore

We originally suggested that it might be worth it for some taxpayers to prepay their 2018 state and local income tax liability this year to maximize that deduction as well.

But that's no longer possible: the new bill says that state and local income taxes paid for any tax year beginning in 2018 will not be deductible on your 2017 taxes.

"As the Tax Cuts and Jobs Act seeks to simplify the tax code, a last-minute provision closed a potential new tax-planning strategy germinating before the bill even passed," Nicole Kaeding, economist with the Center for State Tax Policy at the Tax Foundation, said in a post.

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10 hours ago, gleninjersey said:

At the end of the above linked article it says below.  So can you still prepay some of next year's 2018 tax bill and deduct it from your 2017 taxes?  Or is that null and void?  

 

Unfortunately, you can't pre-pay SALT anymore

We originally suggested that it might be worth it for some taxpayers to prepay their 2018 state and local income tax liability this year to maximize that deduction as well.

But that's no longer possible: the new bill says that state and local income taxes paid for any tax year beginning in 2018 will not be deductible on your 2017 taxes.

"As the Tax Cuts and Jobs Act seeks to simplify the tax code, a last-minute provision closed a potential new tax-planning strategy germinating before the bill even passed," Nicole Kaeding, economist with the Center for State Tax Policy at the Tax Foundation, said in a post.

mama fucking mia.    People are dangerous.   The above bold face quote is from Business Insider and if the next two paragraphs are read below in that article you it clear they are referring to state INCOME taxes not property taxes.    Yes state income taxes are not allowed to be prepaid.   Everything else in this thread is knowledge ignore the bold above.  

Holy fucking shit my head is gonna explode.  Part of me is happy this will wake people up about their own taxes but it not gonna matter it all changes next year.

read my lips you are allowed to prepay your property taxes unless your local town clerk is an asshole. 

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My town Clerk is not an asshole --  says prepay before the end of the week, they'll be sure to process the payment for 2017 -- can prepay the entire year if you have the funds

 

I just moved enough money around to prepay the 1st two quarters 

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You guys made me smile repeating the asshole line.   ;-).  I know i come  across harsh sometimes.   I just get angry trying to do the right thing for every one.  

So interesting snafu to most people is ESCROWS.   Look I have escrows too.  I wouldn’t even wait for my mortgage company to respond.   Prepay 2 quarters now.  Get a receipt.   Claim it on 2017.   Odds are your mortsge company will NOT reduce your scheduled payment.  Fine.  Just let them figure it out later. 

Remember:   Only prepay taxes if you know for sure you are NOT amt 

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ATM=Alternative minimum tax.

Basically the government decides, if you took all the legal available deductions, that you wouldn't pay enough taxes, you filthy rich. So, they disallow certain deductions, therefore increasing you adjusted gross income and calculate your tax bill based on that so you can pay your fair share.

Seriously, the idea was to catch those few taxpayers with very high income but also with high deductions that weren't paying any tax. In reality it just keeps ensnaring more and more taxpayers since the thresholds that trigger the ATM were not indexed for inflation. The 2018 tax bill addresses some of that.

https://www.investopedia.com/terms/a/alternativeminimumtax.asp

 

 

 

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