Homeowners rushing to pre-pay their 2018 property taxes might want to tip their stocking caps to the officials who worked to reduce the harm to New Yorkers from the Republican tax overhaul.
New Yorkers paying some of their 2018 property taxes this year could save themselves money on their 2017 federal taxes, although that’s not guaranteed.
The pre-pay option is in response to the tax bill President Trump signed last week, which limits the deductions for state and local taxes to $10,000. As harmful as that is, it could have been worse. An earlier version of the tax bill eliminated the deduction altogether.
Some governments, including Erie County, had said they couldn’t accept the advance payments without an executive order by the governor. Gov. Andrew M. Cuomo signed such an emergency order. County governments then had to spring into bipartisan action, issuing their own approvals and then rushing to get the necessary paperwork out to the municipalities, as reported in The News.
This all had to take place during a holiday season in which many government workers take time off. As Marjory Jaeger, the Amherst town clerk, quipped to a reporter, “It taxes our employees, because we are shorthanded.”
Erie County officials worked through the weekend to get the process in place, and it appears all 25 towns and three cities in the county are taking part, according to the director of real property tax services. One town clerk’s office that was supposed to be closed this week because of the holidays instead changed course and remained open.
The rushed nature of this attempt to circumvent the tax legislation has created much confusion as taxpayers try to figure out whether it’s worthwhile to reach into savings now to possibly save more money later. Financial advisers are busy fielding questions about a complicated equation.
Some things to consider:
• School taxes, usually the largest portion of a property tax bill, are not part of the deal. Districts operate on a different calendar and budget year than towns and counties.
• Homeowners must pre-pay in person with a check or by mailing a check that must be postmarked this year. Not many are accepting online or credit card payments. For most clerks and tax offices the pay-in-person deadline is the close of business today.
• Erie County towns have set their property tax rates, but since the county hasn’t printed and issued the bills, clerks do not know exactly how much to charge.
• Pre-paying won’t help taxpayers who don’t itemize, and there are questions about whether homeowners who pay taxes through an escrow account can take advantage of it.
And after all that, it’s not clear whether the federal government will recognize the pre-payments. The Internal Revenue Service has issued a warning that “pre-payments could be deducted only in limited circumstances,” according to a story in the Washington Post.
But even if that happens there is no real downside to pre-paying, except losing use of the money months ahead of schedule. Property owners would have to pay the taxes eventually.