KANSAS CITY, Mo. -- A lot of accountants are cramming in tax returns as people hope for one last chance to take advantage of a major tax deduction before it's wiped out in the new year.
Right now, there is no cap on state and local tax deductions. One hundred percent of what you pay in state and local taxes can be deducted.
The tax overhaul signed last week by Republican President Donald Trump puts a new $10,000 limit on the amount of state and local taxes people can deduct from their income when calculating their federal tax liability, effective Jan. 1, 2018.
That new cap could translate into a tax hike of hundreds or even thousands of dollars for some.
So now, people are trying to effectively delay that hike for a year by paying their 2018 taxes in advance.
The IRS said Wednesday that some homeowners who prepay local property taxes due in 2018 will be able to claim the deduction on this year's returns, but only if the taxes have already been assessed and billed. People can't guess at what next year's assessment might be, pay it now and claim a deduction for that amount.
"A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017," the IRS said on its website.
Joseph Arnone, a local CPA, is advising some of his clients to pay property taxes and estimated state and local income taxes before the end of the year to take advantage of the 100-percent deduction for the last time and see a bigger tax return this season.
But Arone said prepaying isn't necessary for everyone. It benefits those who itemize their taxes and pay more than $10,000 in state and local taxes -- and have enough money to shell it out early.
Consult your CPA for advice. If you prepare your own taxes, there is information on your state's Department of Revenue website and on the IRS's website as well.