GOP's tax overhaul has some rushing to pay taxes early
The tax reform bill passed by Congress and signed by President Trump is inspiring some taxpayers to pay their taxes early.
Many Minnesota homeowners have decided to pay their 2018 property taxes before the end of 2017.
Brooke Anthony of Edina was among the folks coming to the Hennepin County Government Center in downtown Minneapolis Friday, eager to pay next year's property tax bill. That'll permit her to deduct it on her tax return for this year.
"My taxes are pretty significant," Anthony said. "So, it may save me a couple of thousand or more."
A tax professional urged Anthony to pay up early. But Mark Rabinovitch of Minneapolis made that decision on his own. He, too, figures he could save several thousand dollars.
"My understanding is that it's advantageous. This is the last year we're going to be able to have a reasonable deduction combining the state income tax and property taxes."
Hennepin County took in over $4 million in early tax payments Thursday. County auditor and treasurer Mark Chapin says he's never seen such enthusiastic, happy taxpayers.
"Yesterday, we had over 600 people who came to the Hennepin County Government Center on the sixth floor. We had a line out the door, past the elevators. And we're having similar numbers today. It's just a steady stream. And we're expecting that we may see even bigger numbers next week," Chapin said.
Ramsey County says it has had 237 prepayments in the past two weeks. Several other Minnesota counties say they've seen a surge in interest in paying taxes early but have not seen the uptick in payments Hennepin County has experienced. Not so far.
Because of the changes in the tax bill, many homeowners will find that next year it doesn't make much or any sense to itemize real estate taxes and other deductions.
The standard deduction will be $12,000 for one person; $24,000 for a couple. And that'll exceed the total deductions that many people have come up with by itemizing tax, mortgage interest and other costs. The legislation also caps the total amount people can deduct for state and property taxes at $10,000.
"If you're itemizing $18,000 or $20,000 a year as a married couple, then you should prepay your real estate taxes," said Ann Etter, a certified public accountant who practices in Northfield, Minn.
But she said people who've already been taking the standard deduction will generally not want to prepay property taxes.
Some counties make it easy to make early payments, taking them online. But some only accept payments by mail or in person.
Of course, some people won't be able to take advantage of any savings to be had from prepaying property taxes. They simply don't have the thousands of dollars needed to pay their bills now.