To Prepay or Not to Prepay Property Taxes

 

If you recall, I sent an email on Christmas Eve regarding strategies when ‘planning’ for 2018 tax law changes.

Prepayment of state and local income taxes were specifically addressed and not allowed by Congress.  However, treatment for prepayment of state and local property taxes were not specified.

This has been a major source of discussion among tax professionals.

The IRS has finally issued guidance (and examples) on December 27, 2017, see IR-2017-210.

In short, if your state and local officials have ASSESSED the 2018 real property tax prior to the end of 2017 AND that tax has been paid by the end of 2017 – then the ‘prepayment’ is deductible. 

If not, prepayment of any tax not yet assessed will not be deductible on your 2017 Individual Income Tax Return.

See What Massachusetts says about Prepayment of Property Taxes – click here.

 

** Individuals (including Married Couples) subject to AMT (Alternative Minimum Tax) will not receive benefit from prepayment of property taxes.**

 

 

Contact your tax professional to see if your ‘prepayment‘ will qualify for 2017 itemized deduction (before the limits kick in).

 

Use your Tax Refund to Buy Savings Bonds

Did you know you could purchase Savings Bonds with your Tax Refund?

The option to purchase savings bonds via tax refund, for yourself or another person became available in 2010.

This is a great gift to your children, grandchildren, nieces or nephews.  The bonds will be mailed to your address with the beneficiary’s name on the bond.

Do I have to use all of my refund to purchase bonds?

  • You can use all or part of your tax refund to purchase I bonds.
  • Your request for bonds must be in increments of $50.
  • Any remaining refund amount not used to purchase bonds will be mailed to you as a paper check or you may elect to have the remaining amount directly deposited into a checking or savings account.

Can I buy savings bonds for a child, grandchild or someone else using this tax refund method?

  • Yes. You can use your refund to buy savings bonds and designate ownership or co-ownership for someone else, such as a child, grandchild or anyone, or elect a beneficiary using form 8888.

Benefits of Savings Bond (read in link): https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm

Calculate the Value of Savings Bonds (select link):  https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm

 

If you are a client and interested in purchasing Savings Bonds this upcoming tax season, let us know or contact our office at 508.203.1676.


  1. https://www.irs.gov/refunds/using-your-income-tax-refund-to-save-by-buying-us-savings-bonds
  2. https://www.treasurydirect.gov/indiv/products/prod_ibonds_glance.htm