Prepaying your property taxes? When Trump signs bill makes little difference
Suburban county treasurers have been swamped with phone calls, emails and visits from people wanting to prepay property tax bills ahead of the biggest rewrite of the federal tax system in 30 years.
"We have seen huge numbers," Lake County Treasurer David Stolman said Thursday. "People began lining up at 8:15 this morning, and there were about 50 people in line during our peak time."
The tax reform legislation is awaiting President Donald Trump's signature, but whether he signs it this month or in January won't make much of a difference for most taxpayers, tax experts said. Bloomberg News and others reported Trump plans to sign the bill Jan. 3 so automatic spending cuts to Medicare and other programs don't go into effect in 2018 by a law aimed at curbing the federal deficit.
Geoff Harlow, head of the tax division for Deerfield-based accounting firm Kessler, Orlean, Silver & Co., said most provisions in the tax bill, including key changes on itemized deductions for individuals, are effective Jan. 1, 2018. If Trump waits until 2018 to sign, "it doesn't change anything. Certainly not for property tax payers," he said.
A provision regarding itemized deductions for medical expenses is retroactive to Jan. 1, 2017, and a provision for businesses regarding bonus depreciation is effective Sept. 27, 2017, Harlow said.
The vast majority of people have "nothing to lose" by prepaying their property taxes, he said.
A provision in the bill caps the maximum deduction homeowners can claim for property and state income taxes at a combined $10,000, either filing singly or jointly, starting with the 2018 tax year. Through the 2017 tax year, there's no limit to how much homeowners who itemize their income tax returns can claim as a deduction for property taxes, as well as state income taxes.
Anyone whose combined state and property tax deductions could exceed $10,000 in 2018 can receive one last full benefit of the uncapped deduction this year by paying property taxes now, so that they're deductible on the 2017 tax return. Then, they can claim the new increased standard deduction in 2018 -- $12,000 for single filers and $24,000 for joint filers -- essentially double the current rate.
Some people subject to the alternative minimum tax in 2017 might not benefit as much from prepaying their property taxes, but they won't be hurt by it, either, Harlow said. Still, it's always best for individuals to consult with a tax adviser, he said.
Kane County Treasurer David Rickert said his office anticipates receiving 1,000 property tax prepayments totaling more than $10 million by the end of the year, nearly 20 times as much as last year.
As of Thursday morning, 394 people had prepaid a total of nearly $4.4 million, Rickert said. In 2016, the total was $537,700.
DuPage County Treasurer Gwen Henry said that by Thursday morning, 1,376 people had prepaid their property taxes for a total of $18.2 million. Last year's total was about $1 million, she said. "I have 75 people waiting for me on the phone right now," she said.
In McHenry County, about 50 people typically prepay their property taxes each year, Treasurer Glenda Miller said. But this year, more than 200 residents have prepaid so far, with eight days left before the Dec. 29 deadline.
"People are in fear of the unknown," Miller said, referring to the federal tax bill's cap on homeowners' deductions.
Cook County Treasurer Maria Pappas said her staff worked hard to make the first 2017 property tax installment payable online starting Dec. 12 in anticipation of the legislation approved by Congress on Wednesday. First-installment bills, due March 1, usually are mailed in February.
So far, about 17,000 people have prepaid nearly $119 million in 2017 property taxes, Pappas said.
Property tax consultant Terry Ennes of Arlington Heights said it's unfair that people in Cook County can prepay only their first tax installment -- equal to 55 percent of the total bill -- rather than the whole year's total.
"I can't understand why a county wouldn't accept potentially payments of millions of dollars," he said. "If it's overpaid or not, they got that money interest-free -- how could they not say yes to taking that?"
Pappas said her office must, by law, disburse any tax money collected from about 1.8 million parcels to nearly 2,000 local governments within 30 days.
"We can't distribute inaccurate amounts," she said. "Now, we've reprogrammed to redistribute (the money) to be out of here in 30 days. We started to feel the rumble and we assigned 20 people in the last few weeks to reprogram everything."
• Daily Herald staff writers Lee Filas and Lauren Rohr contributed to this report.