Dear Friends and Clients,

The purpose of this email is to update those of you who are interested on the process of prepaying your 2017 property taxes (otherwise due in 2018) in light of the changes to the income tax code that were passed by the House and Senate this week.  Cook County has simplified its process of prepaying property taxes since our previous email.  DuPage, Kane, Lake and Will County still accept prepayment of property taxes.  However please note that prepayments for all Counties, must be received no later than December 29, 2017.

As a reminder, individuals who have been subject to the Alternative Minimum Tax (“AMT”) will likely derive less, if any, benefit than those not subject to AMT from the prepayment of local property taxes or payment of their 4th quarter estimated state income tax payments.

For those who reside in Cook County, since our previous email regarding this matter, the process to prepay property taxes online has been significantly simplified.  You no longer need to submit a request to prepay your first installment and instead can simply enter your Property Index Number (PIN) on their website at: https://www.cookcountytreasurer.com/payment.aspx.  You will have the option to view and prepay the first installment of your 2017 property taxes payable in 2018 via e-check or credit/debit card.  The service fee for paying with an e-check is $1.00 and the processing fee for a credit card is 2.10% of the payment amount.

For more information on how to prepay property taxes in Cook County, please see the following link: https://www.cookcountytreasurer.com/prepayment.aspx

For information on how to prepay property taxes in DuPage County, please see the following link: https://www.dupageco.org/Treasurer/1831/

For information on how to prepay property taxes in Will County, please call the Will County Treasurer's office at (815) 740-4675.

For information on how to prepay property taxes in Kane County, please see the following link: http://www.kanecountytreasurer.org/

For information on how to prepay property taxes in Lake County, please see the following link: http://www.lakecountyil.gov/539/Pre-Payments

Please note that any prepayment of property taxes must be received by the respective County by December 29, 2017.

In addition to providing the above information regarding prepayment of property taxes, we would like to provide you with a summary of our understanding of what the new tax laws mean.  Remember that this is our most current understanding, but please do not rely solely on this.  While further implications of the new tax bill are still coming to light, rest assured that our office will do our best to determine the most advantageous approach for each client for the remainder of this year as well as the upcoming years.

Most of the proposed changes will be effective January 1, 2018.  None of the changes will affect 2017 tax returns to be filed in 2018.

Below is a summary of proposed changes we anticipate will be included in the final bill that we believe are relevant to our clients.  There is still time to plan and make necessary changes before the end of the year – please reach out to us to discuss your personal situation in greater detail.

 INDIVIDUAL: Taxes

Changes have been made to both Tax Rates and Tax Brackets:

Married, Filing Jointly

Single

Rate

$0 - $19,050

$0 - $9,525

10%

$19,051 - $77,400

$9,526 - $38,700

12%

$77,401 - $165,000

$38,701 - $82,500

22%

$165,001 - $315,000

$82,501 - $157,500

24%

$315,001 - $400,000

$157,501 - $200,000

32%

$400,001 - $600,000

$200,001 - $500,000

35%

Over $600,001

Over $500,001

37%


 Alternative Minimum Tax (AMT) remains but the exemption has increased:

  • Married, Filing Jointly $109,400 (up from $84,500)
  • Single $70,300 (up from $54,300)

 INDIVIDUAL: Deductions

  • Standard Deduction is increased:
    • Married, Filing Jointly $24,000 (up from $12,700)
    • Head of Household $18,000 (up from $9,350)
    • Single $12,000 (up from $6,350)
  • Personal exemptions are eliminated and many itemized deductions are suspended (including tax preparation fees, investment expenses, unreimbursed business expenses, and professional/union dues).
  • State and local income taxes, sales tax, real estate and property taxes are grouped together and deductible up to $10,000 per year in total (no limitation previously).
  • Mortgage interest is deductible on principal up to $750,000 on primary residence purchases after December 15, 2017.  Before that date interest is deductible on principal up to $1,000,000.  Mortgages on two personal residences are eligible for deduction.
  • Home Equity Debt Interest deductions are eliminated.
  • Medical expenses are deductible in excess of 7.5% of AGI for 2017 and 2018 only. (This is important and more insight will be coming)
  • Cash charitable donations are limited to 60% of AGI (up from 50%).
  • Child Tax Credit will increase to $2,000 per child (up from $1,000), subject to limitation and phase out.
  • Penalties eliminated due to not having health insurance, beginning in 2019.

 BUSINESS: Taxes

  • Top corporate tax reduced to 21% from 35% for non-personal service corporations.
  • Alternative Minimum Tax (AMT) for corporations repealed.
  • Qualified business income taxable from partnerships, LLC’s, sole-proprietors or S-Corp’s will receive a 20% deduction subject to phase out.  Net pass-through income after the 20% deduction is subject to taxpayer’s marginal income tax rates. (This is an important area and more insight will be coming)

 BUSINESS: Deductions

  • Business interest expense is deductible up to the sum of business interest income plus 30% of adjusted taxable income (exemption if taxpayer’s average annual gross receipts is less than $25 million).
  • First year depreciation, or bonus depreciation, is expanded to 100% placed in service from September 27, 2017 to December 31, 2022 up to $1,000,000, and all property will be eligible for this deduction.
  • Deductions for entertainment or recreation activities eliminated (previously 50%). (Take note of this as this is a significant change)