So with the new law, what is the consequences of paying alimony? I saw they were taking away the deduction (and then tax burden from other spouse) but one article looked like it only applies to divorces finalized after this year?
Brother finalized his divorce this year. Paid alimony last year but didn’t take the deduction to have more money go to ex. Was planning on doing taking deduction this year - still possible?
@sylvan8798 I haven’t seen anything definitive, but my feeling, fwiw, is that the stuff on schedule E is an investment, not a business. So unless you turn it into a business structure, you won’t get the deduction. Hopefully I am wrong.
Creating a sole proprietorship in WA seems really easy, just a name and a $5 fee. However, if you have to pay B&O tax, it looks like a big mess, @intparent. Wonder why they have to make it so difficult and complicated.
@notrichenough I don’t disagree if they sued you personally. But your lawyer should fight like heck to get you dismissed, personally. And while @bunsenburner indicated, yes they can try to pierce the corporate veil, it is more difficult in practice than on paper. My own opinion is to do an LLC. In IL it costs $250 a year to the state. It is certainly reasonable to decide not to. WA sounds like a nightmare place to do business.
I’m not surprised your board member friend has no idea - especially since Exec order was signed less than 24 hours ago.
I’ll see what they say when I go to town hall to pay the non school part tax.
Here is how some of this prepay was explained to me.
Where I live…we can ONLY prepay things for which we have a balance. So the tax bills already sent…have the remaining balance based on the 2017 billing.
We can NOT prepay anything which hasn’t yet been billed…or for which an assessment has not been made. Our 2018 property tax bill will be sent in June 2018. That mill rate hasn’t been set…and at this point…no one has an mont for that billing on their accounts. Therefore…it cannot be prepaid.
The town has no facility to just hold money for which they haven’t sent a bill.
I just paid the balance of my 2017 property tax bill (ours includes the school bills).at this point…my balance owed to the town is $0. And they won’t be sending me an additional bill until June.
YMMV…but really that makes sense.
For anyone in Montgomery County MD - county council has reversed course again - now there is a meeting and public hearing on Tuesday to decide if we can prepay property taxes due in 2018 by the end of 2017 so that we can include them in our itemized deductions for 2017. Not leaving much time to get this done even if they vote yes on Tuesday.
I’d like to do it. Annual property taxes are $6200 - if I can pay that in 2017 and include that in itemized deductions, would be a help. We’ll take the new $24,000 standard deduction in 2018, so it’s the last chance for itemized deductions.
That is the same here except Gov. Cuomo issued an Exec order overriding state law.
My town sends out the first part of our prop tax bill the first week of January and it’s due at the end of the month. But, now we can prepay it by Dec. 29th.
School tax isn’t billed until September in most towns in NY. I don’t know how they are going to handle it - given Cuomo’s order. Guess I will find out next week.
Actually, @emilybee -
I hadn’t spoken to him yet. I just got off the phone with him and he said prepayment won’t help anyone subject to AMT. With regard to the school tax bill, he said that even if it’s not up on line, I could probably pay what I did last year and it would count, though it might not help depending on the AMT issue. Even if it hasn’t billed yet, the Cuomo executive order MIGHT allow it. The bills are generated by the town/county, not the school board, so he can’t say when they might come out. So, I think I might do that. Even if I am screwed over by the AMT, I still have to pay that money at some point. The only thing I have to do is leave at least $10K to pay next year so I get that deduction. I have to play some math games in the next couple of days. For instance, my village taxes are due in June and are about $1K or so a year. I doubt they can be prepaid as they are due only once a year, so I can count that amount in my $10K. I prepaid the bill due in April 2018 and am now waiting on the one due in January and July to see if I can prepay those. I will prepay the amount that will leave me with the $10K to deduct next year since partial payments will be excepted, at least this one time.
Is there a cap on existing mortgage interests deduction?
My school tax bill is also generated by the town but we pay directly to the school district, not the town’s Receiver of Taxes. That’s the biggest part of my local tax bill so I’d like to prepay if I can.
If I were paying all these tax bills in advance, I’d watch my escrow balances and the way the tax is reported on 1098 very carefully. Most of the systems aren’t set up to take payments in advance, they won’t be calculating the payments correctly. If anyone then sells the property, the taxes owed by each party will be even further screwed up. The counties will need to post the payments by the end of the year and it is a process they aren’t used to. Since the year ends on a weekend, that’s several more days lost and which may cause delay.
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@scmom12, it by “this year” you mean for 2017 taxes, then nothing has changed. So he can deduct if it makes sense. The changes will all come about for 2018 taxes which will be filed in 2019.
No change to the million dollar cap on existing mortgages, I think you can even refinance a current loan to that level. $750 K cap is for new mortgages.
We pay our school taxes to the town receiver of taxes.
I don’t have escrow to deal with. One house is fully paid off, so I pay the taxes directly. The other has a mortgage held by a credit union, which doesn’t do escrow, so again I pay the taxes directly.
People just need to be careful. Even though the executive order says taxes should be accepted if postmarked by December 31, that day is a Sunday and the PO is probably going to be closed. If you mail your preepayment, do it by the 30th and I would go to the post office myself and pay the extra dollar or so for a proof of mailing.
My town allows you to pay on line by check or credit card, for a small fee. That might be worthwhile as well.
We paid the rest of our estimated taxes as did my D. Also paid the 2nd installment of our property tax. We are in Ca so we already had the bill.
My kids file a schedule E with their taxes for income from a rental property that they are part owners of. One of them this amount is in addition to her full time W2 job. I’m assuming that she won’t be itemizing as she owns no real property. Will her rental income be taxed at the same rate as her ordinary income?
My other child has the rental income, his full time job income, an Amazon business and also does freelance work. Is all his income taxed at the same rate. He also is getting married in the fall. How does that factor into his taxes. Do they file as if they were married the entire year?
Please excuse my ignorance on this. I’m guilty of leaving all tax issues to my H and our accountant.
I have no escrow either.
I’ll be paying in person. They have already said they are accepting January tax bill payments. It’s just the school tax part that I don’t know what they will do or how they will handle it.
@mom60. Marriage is as of the last day of the year. As for the other income the jury is still out. It’s pretty confusing what they did and will take some time to work thru.
The miscellaneous deductions exceeding 2% of your gross income (lines 21-27 of the 2016 Form 1040 Schedule A, see https://www.irs.gov/pub/irs-pdf/f1040sa.pdf ) have been eliminated, according to https://www.hrblock.com/tax-center/irs/tax-reform/3-changes-itemized-deductions-tax-reform-bill/ .
These include unreimbursed employee expenses (examples cited in some news articles include uniforms and equipment required for work but paid for by the employee).
@mom60 No change in the way schedule È income is taxed. It is just ordinary income, same as W2. Your son will be able to file jointly. People can get married on December 31 and file jointly. Essentially for tax purposes, married is married no matter when the wedding takes place. Same deal with December babies and the child tax credit.
Your son may additionally qualify for a deduction of up to 20% of his net income from his Amazon business and freelancing work if he files schedule C’ s from each. But that whole section of the law is written in a very confusing manner.