Tax Reform - California Nightmare
Dec 23rd 2017, 5:23 am
#1
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Location: California
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Tax Reform - California Nightmare
Hi. In light of the rec by tax reform, I’m trying to figure out whether I should pre-pay April’s property tax ($10k). My county says we can. But I hear conflicting advice as to whether we should. Apparently if you pay AMT then you shouldn’t. How do I know if I’ll need to pay AMT? We did pay it last year (but my husband sold shares last year so that may be why?). So confused! Any advice would be much appreciated! Sadly I no longer have a tax guy. We used turbo tax last year for the first time!
Dec 23rd 2017, 6:51 am
#2
Often not so civil...
Joined: Apr 2010
Location: The Boonies, GA
Posts: 9,561
Re: Tax Reform - California Nightmare
Since no one is quite sure how things will play our under this new tax code, evenI would suggest a consultation with a tax specialist in this case.
Dec 23rd 2017, 5:20 pm
#3
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Joined: Mar 2008
Location: Santa Cruz, CA
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Re: Tax Reform - California Nightmare
Since property taxes are not an allowable deduction when calculating AMT there is no benefit to paying them before the end of 2017 *if* you are going to be paying AMT in 2017 anyway since it won't reduce your tax liability.
If you paid AMT for the 2016 tax year it is not unlikely that you will also be paying AMT in 2017. While it is impossible to say for sure without doing all of the calculations, California state taxes are so high that they, alone, can push you into AMT territory (this is true for me, for example).
On the other hand, assuming that things don't change (left wing coup, wholesale reversal of the last year's legislation) those taxes definitely are not going to be deductible next year so there is no "harm" in paying them earlier other than having to come up with the $10,000 a fee months earlier. If you have $10,000 lying around not earning any appreciable interest then you might as well pay early - if not, just wait until next year.
If you paid AMT for the 2016 tax year it is not unlikely that you will also be paying AMT in 2017. While it is impossible to say for sure without doing all of the calculations, California state taxes are so high that they, alone, can push you into AMT territory (this is true for me, for example).
On the other hand, assuming that things don't change (left wing coup, wholesale reversal of the last year's legislation) those taxes definitely are not going to be deductible next year so there is no "harm" in paying them earlier other than having to come up with the $10,000 a fee months earlier. If you have $10,000 lying around not earning any appreciable interest then you might as well pay early - if not, just wait until next year.
Dec 23rd 2017, 5:27 pm
#4
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Joined: Aug 2012
Location: California
Posts: 353
Re: Tax Reform - California Nightmare
Since property taxes are not an allowable deduction when calculating AMT there is no benefit to paying them before the end of 2017 *if* you are going to be paying AMT in 2017 anyway since it won't reduce your tax liability.
If you paid AMT for the 2016 tax year it is not unlikely that you will also be paying AMT in 2017. While it is impossible to say for sure without doing all of the calculations, California state taxes are so high that they, alone, can push you into AMT territory (this is true for me, for example).
On the other hand, assuming that things don't change (left wing coup, wholesale reversal of the last year's legislation) those taxes definitely are not going to be deductible next year so there is no "harm" in paying them earlier other than having to come up with the $10,000 a fee months earlier. If you have $10,000 lying around not earning any appreciable interest then you might as well pay early - if not, just wait until next year.
If you paid AMT for the 2016 tax year it is not unlikely that you will also be paying AMT in 2017. While it is impossible to say for sure without doing all of the calculations, California state taxes are so high that they, alone, can push you into AMT territory (this is true for me, for example).
On the other hand, assuming that things don't change (left wing coup, wholesale reversal of the last year's legislation) those taxes definitely are not going to be deductible next year so there is no "harm" in paying them earlier other than having to come up with the $10,000 a fee months earlier. If you have $10,000 lying around not earning any appreciable interest then you might as well pay early - if not, just wait until next year.
Dec 23rd 2017, 5:46 pm
#5
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Joined: Jan 2006
Location: San Francisco
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Re: Tax Reform - California Nightmare
There are some AMT calculators on the web. I plugged my numbers in and found that even though I will likely pay a small amount of AMT, it pays me to prepay April's taxes - which I've done.
Of course, this only helps for one year. I'm almost at retirement age and am seriously considering my options at this point...
Of course, this only helps for one year. I'm almost at retirement age and am seriously considering my options at this point...
