New GOP tax overhaul causes confusion for some homeowners
The new tax overhaul President Trump signed into law last week set off a blizzard of activity at local tax offices. Homeowners from coast to coast are now scrambling to prepay their property taxes for next year in order to save money.
Right now, taxpayers can deduct certain state and local taxes, like property taxes, on federal tax returns. But as of Jan. 1, that deduction gets capped at $10,000.
That complicates things for Americans who own expensive homes, live near a big city like Atlanta or Dallas or in a high tax state like California, Massachusetts or New York. Some taxpayers are scrambling to see if it makes sense to prepay their 2018 taxes.
Joe Kovar is an accountant outside of San Francisco. He says some clients stand to lose thousands.
"If it's confusing to the tax professional community, it's doubly confusing for the general public," he said.
In New York, Gov. Andrew Cuomo signed an executive order making it easier to prepay property taxes. But in Westchester County, a suburb just north of Manhattan, some municipalities can't calculate payments in time. The median property tax bill there is $13,000, among the highest in the country.
"With the bill being passed in December, you only gave the average person approximately two, maybe three weeks to make an informed decision," said Dean Carman, town treasurer for Arlington, Massachusetts. He said more than 1,000 taxpayers have come in within just the past few days.
"I don't think anybody has seen anything like this before," he said.
On Wednesday, the IRS said homeowners need to have an official tax assessment to prepay property taxes, which complicates things for people who have already prepaid based on an estimate.
