New federal tax bill doesn’t treat Washington and Greene property taxpayers equally
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In the rush to produce sweeping changes to the federal tax code before Christmas, the Republican-controlled Congress has inadvertently caused confusion here at home with 2018’s arrival.
While the new tax plan reduces earned income taxes in every bracket and doubles the standard deduction for both single- and joint-filers, it eliminates the $4,050 personal exemption per dependent and caps the amount of state, local and property taxes that can be deducted each year at $10,000.
That left many homeowners in Pennsylvania scrambling to pay their 2018 property taxes early in order to count it on their 2017 returns.
It’s also now raising legal questions within the state Treasurer’s Association and Internal Revenue Service, both of which said last week that early payments would not be permitted for a 2017 write-off.
But then again, that opinion also depends in which county your property is located.
Washington County Treasurer Francis King welcomed the early payments since the county’s tax rate didn’t change and the bills were already prepared and going out the first of this year.
“I just hope they don’t wait,” King said last month.
Allegheny County offered a similar amnesty period.
The problem, though, is that not all counties share the same tax-collection period. In fact, taxpayers in Greene County won’t be granted that same luxury.
Greene County Treasurer Cory Grandel said last week he researched the matter in the state tax code and discussed the issue with the state Treasurer’s Association before deciding prepayment of taxes to seek a deduction in the current year is not legally permitted.
“You can’t legally claim a deduction for paying a liability that doesn’t yet exist,” he said.
While the county’s millage rate is remaining the same, the tax bills haven’t been fully calculated yet, so any payments would only be estimates. That won’t fly with the IRS.
So that means the new tax bill is treating payers of property taxes in two neighboring counties differently. If you live in Washington County, enjoy your 2017 tax return! If you’re a Greene Countian to the south, well, tough luck on the deductions.
The premise behind the Republican-passed Tax Cuts and Jobs Act was that it would be more equitable for all taxpayers. But it eliminates many popular middle-class deductions, and herds the vast majority of taxpayers into standard filing. where they can’t use charitable donations or property-tax payments as deductions. That penalizes many middle-class homeowners.
Even before it went into effect this week, the tax overhaul began offering different incentives depending on which side of the county line you live on. What other surprises might it bring in 2018?