The States Department of Revenue commissioner is calling on the IRS to clarify if Minnesotan’s who prepaid 2018 state and local property taxes in 2017 can deduct those payments on their federal income tax returns this year.
Federal tax changes aim to limit the annual state and local tax deduction at 10-thousand dollars starting in 2018. Some residents paid their 2018 taxes late last year in hopes of deducting their 2018 payments on this year’s return.
Administrator Bob Meyer says Blue Earth County had over 2-million dollars worth of pre-payments for property taxes late last year.
“The issue that the commissioner is asking the IRS for clarification on was an issue that was discussed, really at the end of December. In terms of will these be payments that are deductible on the 2017 personal tax return of the property tax payers. We were getting kind of mixed messages at that time. So, our staff was being asked what’s gonna happen here. We really said, you’re gonna have to talk with your tax professional because, we’re not sure.”
For perspective, Meyer says pre-payments only totaled 170-thouand dollars at the end of 2016 in Blue Earth County.
“If they’ve claimed their payment on their 2017 tax return and have gotten a refund from the IRS, then it’s determined that that wasn’t a deductible expense in 2017, that would be a problem for a lot of tax payers.”
If the IRS allows the deduction, it will carry forward to the Minnesota return.