STUMP » Articles » To Prepay or Not to Prepay Taxes: That's the Question » 29 December 2017, 11:27

Where Stu & MP spout off about everything.

To Prepay or Not to Prepay Taxes: That's the Question  


29 December 2017, 11:27

…that needs to be answered prior to Dec 31. Or today. Depending.

I will kick this off with a message from Illinois:


What’s new?

From Mark Glennon: Turmoil Grows Over Disparity In Rules For Prepayment Of Property Taxes – Wirepoints Original

A matter of immediate importance to many property owners — prepayment of property taxes — is rapidly descending into chaos and unfairness. Can you prepay property taxes before the end of this year or not? You can for purposes of getting a deduction in 2017 under the new federal tax law, but the problem is whether your county will accept prepayment. It varies by county, which is obviously unfair, and reports are very confusing on what the rules are.

If you own in Cook County, try to prepay your 2017 taxes (due in two halves in 2018) and you’ll find that the county is only set up to allow you to pay 55% of the prior year’s tax. The place to do so is linked here.

But look here and you’ll see suburban McHenry County allows you to prepay a full year’s taxes, apparently, but you have to sign an agreement by Dec. 29. In fact, this article says you can prepay two years worth of taxes. (I don’t know how far out the federal tax code would allow deductibility, however.)

Nearby Kendall County, however, reportedly, is “taking a beating” from irate taxpayers because they can’t accept any prepayments!

There’s more at the link.

There have been similar messages scurrying around New York.


Warren Lucas, the town supervisor for North Salem (where I live), has made multiple posts on the property tax prepayment question.

Here is something from December 27:

Town Tax Prepayment and IRS

Please see the attached PDF from the IRS. You cannot simply prepay a tax bill for the hell of it. It requires an assessment which equates to a warrant. There is no warrant currently available for County taxes. The Town budget however was approved in early December and a warrant issued.

Unlike other Towns North Salem has created the correct 2018 Town taxes based the Town Budget. You will need to look at the PDF on the previous FACEBOOK entry or the Town Website, specifically this page;…/information-prepayment-2018-t…

The pdf with your taxes is here;…/North%20Salem%20Taxes%20for%2…

Unless you have a big screen it will be small so right click on the PDF and SAVE AS ….. on your computer.

Please have your Tax Accountant look at this and tell you if what you are doing is going to help you out. We are not representing the benefit of this just trying to provide it for those who have asked.

You can’t prepay all 2018 taxes. The school budget is not even done and wont be until May or June.

I pity the poor tax accountants, except there are often end-of-year calls to check a position. The position this year is a little different.

[I love Warren’s straightforward way of expressing things, too]

I happened to “prepay” my second part of school taxes – except we’re given those bills in September, having to pay the first part by September 30, and the second part by January 31, but one could pay it all in September if one wanted to. I believe that bit went over $10K for me this year, but I forget.

We also have the April taxes, as mentioned by Warren above. I’m happy to see what I need to plan for, but I’m unable to prepay that bit at this time…

….and I don’t know if it will help a hell of a lot.

My property tax is actually falling next year, due to a town-wide re-assessment.

- CT state income tax
- NY state income tax
- Westchester/North Salem property taxes

In the past, I’ve hit the AMT, and it may be that it would do me no good to prepay these particular taxes.

This is why Warren keeps mentioning having to contact one’s tax accountants.


So Governor Cuomo has decided to do a variety of things.

From 22 Dec 2017: Governor Cuomo Takes Emergency Executive Action to Deliver Property Tax Deductibility For New Yorkers

Executive Order Authorizes Localities to Issue Warrants For the Collection of Early Tax Payments

Executive Order Allows Taxpayers to Make Partial Property Tax Payments

Governor Directs State Department of Taxation and Finance to Work With Localities to Facilitate Early Tax Collection

Action Helps New Yorkers Avoid Devastating Impact of the $10,000 Cap on SALT Deductions in the GOP Tax Bill

Governor Andrew M. Cuomo today issued an emergency Executive Order to help protect property owners in New York from the devastating impact of the GOP tax bill. This order authorizes local governments to immediately issue tax warrants for the collection of 2018 property tax payments and allows property owners to pay at least a portion of their bill before the end of the year and under the current tax construct. The Governor directed the Department of Taxation and Finance to work with local governments to facilitate early tax collection.

The federal tax plan, signed into law today, caps the deductibility of state and local taxes at $10,000, effectively raising property taxes and reducing home values in New York and in states across the country.

“As Washington wages an all-out assault on this state and this nation, I have authorized local governments to allow property owners to pay part or all of their taxes early,” Governor Cuomo said. “New York has made unprecedented progress reducing the burden of taxes on our middle-class families, and we will not allow this attack to roll back all that we have achieved. This Executive Order will allow property owners to deduct either part or the full amount of their payment from their federal taxes before the GOP tax bill goes into effect.”

Blah blah blah.

I will get to the second, stupider bit in a minute.

You can go to the press release to read the details.


I live in Westchester County. The current, outgoing Westchester exec says no on prepaying 2018 county taxes. The link goes to the press release from Gov. Cuomo:

State Budget Director Robert Mujica Issues Letter to Rob Astorino Condemning Westchester County’s Refusal to Allow Taxpayers to Prepay Property Taxes

New York State Budget Director Robert Mujica today issued a letter to Westchester County Executive Rob Astorino condemning Westchester County’s refusal to allow taxpayers to prepay next year’s property taxes before December 31.

The text of the letter is below:

Dear County Executive Astorino,

As you know, President Trump’s tax reform bill severely limits the deductibility of local property taxes. As you also know, Governor Cuomo has issued an executive order to allow taxpayers to pay their 2018 property tax bill prior to the end of the year so those taxes can be deducted in full on their 2017 federal tax returns.

One would assume this is of special interest to you as Westchester has extraordinarily high property taxes, the highest in the state and often the highest property taxes in the nation. The loss of full deductibility will have serious negative consequences to Westchester residents who often pay in excess of $30,000 in taxes a year.

The state has 62 counties. The overwhelming majority of the counties have allowed the tax payers to prepay next year’s property taxes before December 31st. Your county has refused.

Westchester County property tax payers are among the most negatively impacted in the entire nation. Counties across the state have overcome administrative obstacles to help their tax payers. While we know your term is nearly over and you will be seeking employment elsewhere, we urge you fulfill your constitutional obligation and please put Westchester tax payers first.

We urge you to reconsider your decision on behalf of the tax payers of Westchester County before it is too late.


Robert Mujica, New York State Budget Director

Only 62 counties? Ha, North Carolina has 100!

I am just fine with Astorino’s screw you move, because the county hasn’t determined the county taxes yet. As Warren Lucas noted, you can’t just prepay any amount for the hell of it.

I leave it as an exercise for the reader to see why.


I am not a lawyer, but I really don’t see how the following works.

Blue-state governors gear up for possible legal fight over GOP tax law:

New York Gov. Andrew Cuomo says the state will consider challenging the limits on state and local tax deductions.

New Jersey Gov.-elect Phil Murphy previously said his state would mull legal options.

Many Republicans argue that the deductions prop up high-tax, high-spending states.

New York Gov. Andrew Cuomo said Thursday that his state will consider a legal challenge to the Republican tax law — the latest blue-state leader to discuss pushing back against the massive tax overhaul.

“There are serious legal questions” about the law set to take effect in the coming days, the Democrat told CNBC’s “Power Lunch.” He targeted the planned limits on state and local tax deductions, which primarily benefit the residents of states like New York, New Jersey and California.

Cuomo contended that congressional Republicans are “raiding the blue states” to offset the tax code changes, which include a permanent tax cut for corporations and a temporary tax decrease for most individuals.

“I think there’s potential legal questions on that — equal protection under the law, due process under the law,” the governor said.

Everybody gets treated the same. There is a cap on how much one can deduct in state/local taxes. Doesn’t matter what state you live in.

But hey, let’s go to the rush transcript from the governor’s office:

Katy Tur: How do you challenge that?

Governor Cuomo: We’re doing the legal research now to see if there is a legal challenge. I think it may very well violate the due process and equal protection laws. It is the most egregious political act I have seen. Not since the civil war have you seen the states this divided. And it was done quickly. It was done without any public review. And now you’re seeing the backlash. It doesn’t make any sense from a national point of view either because if you want to stimulate the nationwide economy, why would you send a dagger to the heart of New York and California? Two of the biggest states and two of the biggest economic engines.

Oh, please.


Look, I don’t even know if I’m gonna get screwed by the new law — just because I won’t be able to deduct all this crap, in itemization, under the standard deduction I may be just fine…. and then, I have lower marginal rates. For all I know, I may have a tax cut… I really am not gonna know until about February 2019 and I start doing my 2018 taxes.

I am high income, yes, and I pay a lot in property taxes … but I’m on the lower end in North Salem in terms of income & property. Yes, some of those people will get higher taxes, no doubt, especially if they’ve been pursuing “tax optimization” under current regimes… again, I pity the poor tax accountants. They’re gonna have to really sit down and crunch stuff.

(And I pity myself, but I’m only trying to figure out high-level stuff like possible effects on muni yields and insurance company operating margins. It’s actually quite easier to look at a very high level compared to having to work through the details for a particular household or company.)


So let’s wrap this up with twitter reactions to Cuomo’s hyperventilating:

First, Cuomo’s big guy stance:



And the reactions:

This sort of attitude I find highly amusing:

So here’s the deal. New York, California, and the other high-tax states whose electoral college votes went to Hillary Clinton have essentially no leverage in this case.

They have turned themselves into one-party Democratic states, so when the Republican Party is in power at the federal level, and there is the party platform not to work with Republicans at all… well, guess what?

Oh, so you’re gonna win elections in 2018? I bet you are… but it’s not like you can make New York or California a lot more Democratic than they already are.

And there are gonna be plenty of places with Democratic senators and reps that are more mixed in partisanship, places with perhaps not-so-crazy taxes, and the people and companies there will be seeing tax cuts.

I’m sure they won’t give a damn that people from rich areas in New York and California have to pay more in taxes.

And I, one of those rich people in New York, am just fine with that.

So rage on, Cuomo. Let’s see what that gets you.

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