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Year End Prepayments for 2017

With the new tax laws on the table for 2018 we have been getting many questions on what to prepay before the end of the year. The first item would be your state estimated tax payments. If you are planning on making a 4th quarter 2017 MA estimated tax payment, it should be made before the end of 2017 so you can deduct it in 2017, you may lose the deduction in 2018. The other topic of discussion has been should you prepay your real estate taxes by the end of 2017 so you do not lose the deduction in 2018. The IRS Advisory recently released an issue where they state:

“The IRS has received a number of questions from the tax community concerning the deductibility of prepaid real property taxes. 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. A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017. 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.” – IRS Advisory Issue 12-27-17

Another payment you should consider is charity donations, those should be made before the end of 2017 as well.

Please consult your tax advisor on all the above information.

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