With the end of the year fast approaching, we are reaching out to you with a timely idea and additional information on the Tax Cuts and Jobs Act.

Our best idea to save on your 2017 income taxes is to prepay your state property taxes by December 31, 2017.  

Here is an example: You live in Hamilton County, Ohio where you pay property tax in arrears, which means your 2017 property taxes are actually not due until 2018.  Right now, you are able to go to the auditor’s website and see what your tax bills will be in February and June of 2018.  The idea here is to pay the total now and lock in the deduction in 2017.  The reason why this is particularly favorable this year is that the tax reform bill limits state and local income plus property taxes to $10,000 combined.  So, if you were to pay your property taxes next year as scheduled, you would likely not get any benefit of that payment on your tax returns.  There are a few caveats to this strategy:

1. AMT – If you are projected to be subject to Alternative Minimum Tax in 2017, then you would not get any benefit for the payment in 2017, because it is added back as part of the AMT tax calculation.
2. Your County – Some counties assess property taxes prospectively and some in arears.  You will need to check with your county whether they would accept a payment of property taxes now.  As discussed, Hamilton County DOES accept payments, but we have seen some Kentucky and Florida counties that do not accept payments.
3. Escrow – If you escrow your property taxes, it may be a challenge to execute this strategy.

There are many additional pieces to the Tax Reform bill, which has now passed the House and the Senate and is set to be signed by the President in the near future.  We outline the major changes as they relate to individual taxpayers here: https://bartlett1898.com/blog/key-provisions-tax-cuts-jobs-act-2017-individuals/

Yesterday, Jason Katz, a Bartlett wealth advisor, was interviewed by Mark Heyne on WVXU, discussing the tax plan and year-end thoughts.  Check it out here: http://wvxu.org/post/year-end-tax-tips-and-how-gop-tax-plan-could-affect-you#stream/0

As with all tax matters, we encourage you to speak with your tax preparer before taking any action.  If you have any additional questions, please reach out to your Bartlett Advisor.

From all of us at Bartlett, we hope you have a wonderful holiday season and wish you the best in the coming year.