Hundreds of Mecklenburg County residents rushed to prepay $2.8 million in property taxes in the last days of 2017, hoping for a benefit on their income taxes.
But the Internal Revenue Service issued an advisory in the final days of the year that said the effort to prepay may not benefit taxpayers at all. That’s because taxes must be assessed, not just paid in 2017, the advisory said.
In Mecklenburg, 2018 taxes are based on the value of homes on Jan. 1, 2018. Taxes are then billed on July 1 and due Sept. 1, according to the county.
The rush to prepay came in the wake of the Republican-led tax cut plan that took effect Jan. 1. That plan limited the amount of state and local taxes that can be deducted from federal income taxes. As a result, individuals will be able to deduct only up to $10,000 in state and local property taxes on their federal income taxes. Previously, taxpayers could deduct an unlimited amount of local taxes.
Taxpayers hoped that by prepaying, they could deduct the amount on their federal tax bill this year.
To add to the confusion, Mecklenburg County had a delay in accepting prepayments because its systems were down due to a hacking last month.
A total of 344 Mecklenburg taxpayers had prepaid by Jan. 3, making up a small portion of total taxpayers. Mecklenburg collected $1 billion in tax payments during the 2017 budget year.
The total number of those who prepaid could increase, because more prepayments could be submitted to the county via mail.