DeKalb County residents prepay property taxes ahead of tax reform

December 28, 2017 GMT

SYCAMORE – DeKalb County property owners have been paying their taxes early in anticipation of changes in the Tax Cut and Reform Act that will no longer allow local property taxes to be deducted.

DeKalb County Treasurer Christine Johnson’s office reported that county property owners had made $1.7 million in early property tax prepayments as of Thursday, more than three times as much as the total at this time last year. It is not a local phenomenon.

“People statewide are doing this,” Johnson said.

The recent tax reform bill passed in Washington eliminated a previous provision in the tax code that allows homeowners to deduct their state and local property taxes from their federal taxes. The new law will cap the deduction for local property taxes at $10,000 a year.

The Internal Revenue Service announced Wednesday that 2018 state and local property taxes prepaid in 2017 will be deductible under certain circumstances. The advisory noted that it is up to local rule when a property is assessed and when that tax becomes due.

“In general, whether a taxpayer is allowed a deduction for the prepayment of state or local real property taxes in 2017 depends on whether the taxpayer makes the payment in 2017 and the real property taxes are assessed prior to 2018,” the IRS advisory read.

In most cases, those paying early are basing their payments on last year’s assessments, as tax bills have not yet been sent out to property owners. They have been informed of the proposed assessment, and any changes in assessments were published at the end of October, but appeals are still being heard by the Board of Review, Johnson said.

Johnson said tax prepayments will be applied to property owners’ 2017 taxes payable in 2018, and taxpayers will be informed of any balance over or under after the bills are finalized. If a homeowner pays too much, she said, they can’t be given a refund because the money will have already been deducted from their income tax.

“It will roll over into the next year,” Johnson said.

To prepay, Johnson said DeKalb County residents have to complete a two-page form and write a check to the DeKalb County Collector by 4:30 p.m. Friday. The office is closed over the weekend before Jan 1.

“We advise people to talk their tax accountant and financial adviser to see if this is something they should do,” Johnson said. “Every person’s tax situation is different.”