We have two years worth of living expenses saved up; pre-paying property taxes, even in a high tax state like MA is easily within our budget. It’s not much different than a big unexpected expense.
They are, in fact, being very specific about this. You can prepay any amount that has already been assessed/billed. California allows you to make two payments. You are billed in October or so with one payment due in December and one in April. If you make both in December, you can write off the whole thing.
Me too. I have always been a saver though. In my case, it’s just paying a little over two grand three months early.
I pre-paid the first two quarters of 2018 (NJ).
I didn’t pay the entire 2018 for a few reasons. Partly because I don’t know what it will end up being (the first two quarters are set in advance), partly because the first two quarters is an amount of cash that I happened to have lying around anyway, and partly because I’ve been pretty close to the AMT in recent years, so I figure paying too much will probably be over the limit anyway. (The IRS has issued guidance saying that only assessed 2018 taxes can be deducted in 2017. In my township the town determines the amount of the first two payments in advance, but these are called “preliminary”, in that the taxes for the entire year are not known, and the first two quarters are based on the prior year - there’s a makeup in the last two quarters. I’m not 100% sure, but I suspect (hope?) that this will end up qualifying as “assessed”, but that the final two quarters will not. So it worked out for me in that sense, although that guidance had not been issued at the time I pre-paid.)
Other than my in-laws with the high-paying jobs I know of nobody who has 6 months of liquid living expenses. Nobody can afford it.
I witnessed somebody prepaying their property tax at town hall last year in large bills. The guy behind me in line quipped “Must be nice”. I just stood there gobsmacked thinking I was ahead of the 8-ball by throwing money at mine every single week.
How the heck do you save like that (fellow MA resident here, btw)? As I just replied, the only people I know of who can save like that are my in-laws with the high-paying jobs who live in the higher-bracket suburbs…
I hate it when people say “must be nice” in reaction to my success. You’re goddammed right it’s nice at this point. The years of hard work and frugality to get here, not so much.
Two good incomes, no kids, years of saving money responsibly, and living well within our means. It certainly helps to start with two well paying jobs.
Are you in your 20s? If not, you should re-look at your budgeting. Pay yourself first, even if it’s just a small amount, and you’ll find a way to live within the remaining $$.
Slide over, I need a seat too.
I just prepaid my first installment of my 2018 property tax, so that combined with a week and a half of hotels during the fire means this has been an expensive quarter for us. I don’t blame the GOP for the fire, but this cap on state and property tax deductions halves what I would have planned to deduct. I am extra hard not going to vote for those guys next time.
I have a lot more than six months of living expenses in my savings account, and I have a mid-paying job. In my case I attribute it to not drinking coffee or shopping at Whole Foods.
I kid, I kid. My only real debt is my student loans (around 9k to go), and until I buy another house, I have no monthly housing expenses because we paid off the mortgage on this house three years ago. My car is paid off, and hopefully being traded in today for a car I’ll be paying cash for.
Our accountant advised us to pay up this year if we were able. We could have deferred the first payment until the end of January 2018 but upon getting his recommendation, we just paid the whole 2017 bill today.
Given that we deferred our 2016 property taxes into 2017, and given that we had to pay taxes on some investments that matured this tax year, we’ve never paid more taxes ever than we have in 2017.
And unfortunately, our accountant has no idea how we’ll fare under the new tax laws. He says he won’t even be able to get his hands on tax software that incorporates the latest changes until at least July of 2018. His only real insight is that paying all the taxes we can this year is more likely to help us, or at least be neutral, than to hurt us by doing so.
There’s a wide distribution of incomes even in local areas unless one just looks at small segment of the demographic who are all alike. There are always some households of a given size living paycheck to paycheck on say $50k, others on $60k, $70k (the US household median is around 59), even at $100k or $200k (I’ve known people at that level who spend every penny they make and more). But even excluding the last cases, the people p to p on 70 could live like the people in their town who go p to p on 60 and thus save; the people p to p on 60 could live like the people p to p at 50 and thus save, down to some level where you really can’t save. Most people who don’t save choose not to, whether they want to admit that or not.
And down at the income level where you really can’t save, people aren’t usually homeowners or if they are likely haven’t benefited from itemizing deductions even up to now. The original topic of prepaying prop taxes is not relevant to that many people who literally can’t afford to save.
CA resident here. In my county we get our property tax bill around September, with half due in December and half the following April. So instead of waiting until April 2018 to pay the second installment we paid it a couple of days ago. It will likely save us about $750.
My guess is that for 2018 taxes we will be taking the standard deduction so it makes sense to put that additional property tax with the 2017 taxes while we are still itemizing. I also made some of my 2018 charitable donations this year.
And that is exactly what got us into this mess in the first place. We wouldn’t be having this problem if we were a red state.
Kind of a dick move by the IRS to wait until everyone had prepaid, and then announce policy.
38% of baby boomers and 23% of millenials have at least six months of expenses saved. Ignore the headline about those who don’t have savings and check out the chart.
If you’re serious about finding a way to save, there are plenty of online resources. You can listen to Dave Ramsey on Youtube or visit the Personal Finance Reddit. I built my own budget plan based on two books, All Your Worthby Elizabeth Warren and Debt-Free Forever by Gail Vaz-Oxlade. Or just start a thread here and ask for suggestions.
Thanks. It took a lot of budgeting and saving for almost two decades to be in this position.
I’m in a pretty similar boat, and I paid the second installment a few days ago. Didn’t do any accelerated charitable contributions yet, but maybe I should throw that together tomorrow.