TWIN FALLS — A handful of Twin Falls property owners scrambled to prepay their 2018 property taxes this week, hoping to maximize their tax deductions before the new GOP tax overhaul kicks in. Dennis Brown was one of them.
Brown, an accountant in Twin Falls, was aware the bill President Donald Trump signed into law last week includes a $10,000 cap on the amount of state and local taxes people can deduct from their federal taxes — and it also ups the standard deduction.
He and the others prepaying their 2018 taxes believed they could use that as a deduction on their 2017 tax returns. But now, it appears that won’t be the case for Twin Falls County residents.
The Internal Revenue Service on Wednesday announced that taxpayers prepaying 2018 property taxes can deduct those for 2017 only if those taxes have already been assessed.
“A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017,” the IRS said.
The Twin Falls County Assessor typically mails assessment notices in June.
Even if they had been assessed, if your mortgage company is collecting escrow to pay property taxes, it’s more difficult to see how or if prepaying would help you. So before you rush off to prepay property taxes, it would be wise to contact your tax preparer, county treasurer and lender (if applicable).
“It can be a strategy in certain situations,” Brown had said early Wednesday afternoon. “The problem is, of course, they passed this bill a week ago. Nobody has their head wrapped around this just yet.”
He’d already reached out to a few of his clients whom he’d felt would benefit from the prepayment, before the IRS made its announcement about assessments.
At the Twin Falls County Treasurer’s Office, “There is a little bit of an increase in people inquiring about it, and a few have come in,” said Janet Wilson, a seasonal employee who helps with tax collection.
Wilson said those who prepaid were basing those payments on estimates using their 2017 property tax — the first half of which was due Dec. 20. All 2017 property taxes had to be paid before 2018 taxes could be prepaid, Wilson said.
Your 2018 property taxes can be prepaid monthly or in one lump sum, but payments must be at least $25. And, according to the Twin Falls County Treasurer’s Office’s list of frequently asked questions, prepaid funds will not be refunded and will need to be used for upcoming taxes.
Aside from the $10,000 cap on state and local tax deductions, the standard deduction in 2018 will rise from $12,700 to $25,000 — resulting in lower taxes for many in the Magic Valley, Brown said.
The new tax bill will take effect Monday.