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Prepaying 2018 SALT and property taxes - do I need a CPA to run the numbers?

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  • Prepaying 2018 SALT and property taxes - do I need a CPA to run the numbers?

    Like other docs on the forum, assuming the tax bill in progress passes into law for 2018, I will be naturally taking the standard deduction in 2018 and thereafter, until the law changes again. Between now and 12/31, we will have the opportunity to deduct 2018 expenses (and perhaps beyond).

    As such, I am interested in paying as much 2018 state and property tax in 2017, up until I hit (or approach) the AMT threshold. I have inquired on this to my accountant, who offered to "run a projection" to guide me.

    Is the "projection" considerably more involved than looking at last year's tax returns (I did), looking the difference between the AMT tax and my paid tax (I did), estimating 2017 tax liabilities (which have lots of current unknowns, including year end bonus, capital gain distributions that are starting to roll in, and K-1s which I won't see until March, 2018), and paying the difference ($45k) toward 2018 state taxes, which I can do online?

    I am not the kind of guy that would take out my own appendix, but is there some magic or voodoo that requires the $CPA$ to run the projection? Or am I being penny wise and pound foolish for DIYing it?

  • #2
    Looks like the proposed law eliminates the ability to prepay state income taxes but not state property taxes.
    When word came down that the deduction for state and local income taxes would be eliminated -- or at the very least, greatly limited -- every advisor worth his salt considered recommending to clients to not only prepay estimated 4th quarter 2017 taxes by the end of this month, but also the entirety of the taxpayer's anticipated 2018 liability. That way, the client could get the deduction before it was gone.

    The final bill eliminates this opportunity, however, by explicitly denying the ability to prepay 2018 taxes in 2017. It appears, however, that the language would preclude you from prepaying only income taxes, and not property taxes.

    https://www.forbes.com/sites/anthonynitti/2017/12/16/the-tax-bill-is-finalized-whos-happy-and-whos-not/#21f67ead2288
     

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    • #3
      My accountant sent me an article from the journal of accountancy saying the same thing.  If you prepay your 2018 state tax you could die and not earn the income was given as an explanation.

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      • #4


        I am not the kind of guy that would take out my own appendix, but is there some magic or voodoo that requires the $CPA$ to run the projection? Or am I being penny wise and pound foolish for DIYing it?
        Click to expand...


        If you have tax software that will do a decent job of calculating AMT, just plug the numbers in. I think TT will allow you to do that, won't it? Surely there is some software on the net that you can download for free.

        Quick Google - I haven't tried this, but you might want to see if it calculates AMT. Just plug in your joint income, the other stuff it asks for, 5 or 6 exemptions and $100k of state income taxes and see what it spits out.
        Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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        • #5
          I read they saw this coming and made it not something you can do with the last version.

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