Still unclear whether paying property taxes early paid off
The IRS still isn't saying if Minnesotans who paid property taxes early can deduct those payments on their 2017 tax returns.
Many Minnesota homeowners rushed to pay this year's property taxes before the end of last year. They determined — despite a lack of guidance from state and federal tax authorities — that the early payments could save them serious money on their 2017 federal taxes.
But the IRS has yet to resolve the matter.
"People were hoping that they could realize that additional deduction," said Geno Fragnito, director of government relations at the Minnesota Society of CPAs. "When, in fact, they don't know."
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Last December, the Minnesota Department of Revenue told Minnesotans to consult tax professionals for guidance.
"The [department] still has not come out and said one way or the other how it will be," Fragnito said.
Many CPAs encouraged clients to make early property tax payments. Some were certain the payments were deductible. Others were uncertain but told clients to make early payments, in case they were deemed deductible.
In December, the IRS said that "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 added that state or local law determines whether and when a property tax is assessed, "which is generally when the taxpayer becomes liable for the property tax imposed."
The federal tax agency did not respond to a request for comment for this story.