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Tax Flash - The Tax Cuts and Jobs Act

 

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New York Governor Issues Executive Order Authorizing Prepayment of Property Taxes

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On December 22, 2017, New York State Governor Andrew Cuomo issued an emergency Executive Order authorizing local governments to issue warrants for the collection of 2018 property taxes, to allow property owners to pay at least a portion of their bills prior to the end of 2017. The Governor also directed the NYS Department of Taxation and Finance to work with local governments to facilitate the early collections.

The Executive Order was issued to help protect property owners in New York from the effects of the Tax Cut and Jobs Act, recently signed by the President, which caps the deductibility of state and local taxes at $10,000. This cap will effectively raise property taxes for many New Yorkers who were previously eligible to deduct taxes in excess of the new cap.

The Governor's Executive Order will suspend local laws limiting the ability of taxpayers to make partial payment of property taxes. As many towns and taxpayers do not know the exact amounts of the tax bills, this order will allow for a partial payment to be paid early and deductible under current federal tax law.

As described in a recent Marcum Tax Flash, the federal Act does not allow a deduction for prepayment of 2018 income taxes in 2017, but does allow deductions for the prepayment of property taxes. For those individuals not subject to the Alternative Minimum Tax in 2017, prepayment of property taxes may result in a lower federal tax bill for 2017.

If you have any questions about the deductibility of taxes and prepayments for 2017, please contact your Marcum Tax Advisor.

 
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