ALBANY — Gov. Andrew M. Cuomo said Friday he signed an order allowing New Yorkers to pre-pay some of their projected 2018 property taxes early — but it’s unclear if and how county governments could actually pull off getting bills out and back by a very tight Dec. 31 deadline.
It’s also uncertain how the Internal Revenue Service will view such pre-payments.
Further, pre-paying school taxes — which is the largest tax bill for most New York homeowners — may not be possible except for residents of a handful of districts.
Still, in announcing his action, Cuomo said it was aimed at basically helping New Yorkers get around an element of the just-signed federal tax law that will restrict deductions for state/local taxes paid to $10,000. That limitation is set to take effect in 2018, meaning it would impact the tax returns filed by most Americans in 2019.
Many Long Island homeowners who itemize their tax returns pay far more than $10,000 in combined state and local taxes, meaning they could take a significant hit. Cuomo said pre-payments could soften the blow.
“It could allow them to take advantage of the deduction this year,” Cuomo said in a conference call with reporters.
Specifically, the order Cuomo signed allows someone to make a partial payment of his/her tax bill. Previously, partial payments were prohibited. Cuomo’s idea is that if, say, you expected to owe $15,000 in state and local taxes in 2018, you could pre-pay $5,000 in 2017, leaving you with $10,000 to pay — leaving you right at the deductible maximum.
Whether the tax systems can take advantage of it is another question.
Many county governments send out tax bills in January and some already have said they can accept early payments by Dec. 31. But others might not be able to deliver tax warrants to property owners by then, much less receive payments.
“Some won’t be in a position to do it. Some will think it too problematic to do so in such a short time,” said Robert Mujica, Cuomo’s budget director.
As for schools, Mujica acknowledged that only the state’s five biggest urban districts (New York City, Yonkers, Syracuse, Rochester and Buffalo) would be able to participate because they already allowed homeowners to make installment payments on taxes. All other districts don’t finalize their budgets until May, with the associated tax warrants payable in September.
Some Long Island school districts that accept installment tax payments also might be able to accept pre-payments, said Bob Lowry, head of the New York State School Superintendents Association.
Even if a homeowner can pre-pay, it’s not clear if that would be the best strategy depending on personal circumstances, such as expecting a child in 2018 or expecting a dependent to become independent, or completing mortgage payments.
And it is not clear how the IRS will handle pre-payments, according to a recent advisory by the New York State Association of Counties.
“The federal bill . . . specifically prohibits any pre-payment of income taxes but is silent on pre-payment of property taxes. Ultimately, it will be up to the IRS to determine if the prepayment of 2018 property taxes are deductible for the 2017 tax year,” Stephen Acquario, executive director of the association, said in a statement.