Short time left to prepay property tax and still deduct from 2017 taxes

THE DEADLINE TO PAY 2017 state and local taxes that will be deductible on 2017 federal taxes is Dec. 31. / BLOOMBERG FILE PHOTO/MICHAEL NAGLE
THE DEADLINE TO PAY 2017 state and local taxes that will be deductible on 2017 federal taxes is Dec. 31. / BLOOMBERG FILE PHOTO/MICHAEL NAGLE

PROVIDENCE – With the calendar year drawing to a close, many residents across the nation are seeking to pay property taxes by Dec. 31 in order to be able to deduct their payments from their 2017 income, since the tax overhaul limits the amount of state and local income and property tax that taxpayers can deduct going forward.

The Internal Revenue Service issued guidance on property tax prepayments this week, saying that to prepay and then deduct that amount from 2017 tax liability, the property being taxed must have been assessed in 2017. While this caused unresolved confusion in many of the state, the general consensus is that if a tax bill has been issued, the taxes may be paid this year, as long as a municipality and or state is accepting payment.

Billed Rhode Island state property tax may be paid before its standard due date by all residents, according to the R.I. Division of Taxation. No new guidance has been issued after the IRS clarification on property tax prepays issued Wednesday.

As taxes will need to be paid or postmarked by Dec. 31 in order to be an itemized deduction on 2017 federal tax payments, only a few days remain to make such payments.

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A sampling of municipalities across Rhode Island:

PBN has reached out to the three most-populated cities in the state as well as the least-populated municipality in the state to see how they are dealing with property tax prepays before the turn of the new year.

A Providence spokesman confirmed Thursday that residents may pay their 2017 taxes in 2017, despite their due dates being in January and April 2018. Providence taxes operate on a calendar year, though bills are issued on a fiscal year calendar. 2018 taxes have not been billed and cannot be prepaid.

Warwick is also accepting payment for all billed property taxes for fiscal 2018. Warwick’s taxes operate on a fiscal year through June 30. Fiscal 2019 property tax has not been billed and cannot be prepaid.

In order to allow residents to deduct fiscal 2018 taxes on their 2017 taxes, Cranston is accepting payments that cover the period through June 30, the end of the fiscal year. Fiscal 2019 bills have not been issued and may not be prepaid.

New Shoreham residents may not prepay their 2017 property taxes, as they have not yet been billed.

As always, it is best to consult a tax professional before making tax payment decisions.

Chris Bergenheim is the PBN web editor.

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