IRS's Order On Prepaying 2018 NJ Taxes: What Does It Mean?

The IRS has weighed in on Gov. Chris Christie's order allowing New Jerseyans to prepay your 2018 property taxes as a way to alleviate the impact of President Donald Trump's plan. And it's not something the state's high-taxed residents may want to hear.

The IRS has issued a statement saying the prepayment of property taxes that weren't assessed prior to 2018 are not deductible in 2017. But what does that mean?

It means property owners can deduct 2018 taxes as long as they have received a bill for them — and for most New Jersey residents, that bill is only for the first two two quarters of 2018, according to Rachael Bell, a spokeswoman for the New Jersey Society of Certified Public Accountants.

"They can deduct their property taxes as long as they have received a bill," she said.

Many New Jerseyans have been filing early, worried that the tax changes - as they're expected to have - will hit high-tax states harder than others. Indeed, Trump's tax plan caps the amount of money you can deduct on state and local income taxes at $10,000.

Christie allowed for the prepayment of taxes for the entire year. But forget it. Bell says you can only do that if a town has issued a tax bill for all of 2018. That's how taxpayers pay their bills in a minority of New Jersey's towns that operate on a calendar year, January-December budget.

Most New Jersey towns operate on a July-June fiscal-year budget, so homeowners get tax bills for property that's been assessed through June 30.

Read more: Chris Christie Issues Order Allowing You To Prepay 2018 NJ Taxes

Also See: What The Tax Overhaul Means For Your Family

U.S. Rep. Leonard Lance, who broke with his party and opposed the GOP bill that barely passed Congress, said Thursday he'll introduce a bill to overturn the Internal Revenue Service ruling and allow taxpayers to deduct all of their 2018 prepayments.

Either way, you'd better hurry up. Prepayments have to be postmarked by the end of the day on Sunday. And if you need to go directly to your town's tax office, today may be your only day - if the office is open.

That tax cap could be offset by other changes, such as the doubling of the standard deduction. And it could get worse for many families who will also lose the approximately $4,000 personal exemptions for each dependent (if you can, talk to an accountant).

Read more: Trump's Tax Plan: How Much Each N.J. Town Would Pay With Deduction Loss

Some municipalities are in the process of ensuring that prepayments received in 2017 are properly credited in accordance with New Jersey law.

The following communities have taken such steps - click on the town to find out more:

• Barnegat
• Bedminster
• Belmar
• Berkeley
• Brick
• Bridgewater
• Clark
• Englewood
• Essex Fells
• Florham Park
• Hillsborough
• Hoboken
• Howell
• Lacey
• Lambertville
• Manchester
• Millburn
• Montclair
• Morris Township
• Oakland
• Roseland
• South Orange
• Stafford Township
• Toms River
• Verona
• Westfield

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