IRS Agrees: Illinois Residents Get Full Deduction for Prepaid Property Taxes

IRS Agrees: Illinois Residents Get Full Deduction for Prepaid Property Taxes

In a victory for families across Illinois, the U.S. Department of the Treasury announced that Illinois families who prepaid their property taxes will receive the full state and local tax deduction.

The announcement came on the websites and in news releases from several Illinois legislators, including Peter Roskam and Randy Hultgren.

“Hardworking taxpayers in our state are entitled to the same benefits as those from every other state,” Roskam said in the news release. “This announcement is a win for the thousands of 6th District residents who stood in line to prepay their property taxes last year. As we move forward with an updated new tax code, families in every income bracket will see a tax cut and Illinois residents will see real tax relief.”

“I am very pleased that the IRS clarified this important issue for hardworking families in Illinois who prepaid their property taxes last year,” said Hultgren, who had said at the March 12 Kane County Legislative Breakfast that a determination by the IRS was pending.

Thousands of Kane County residents decided to prepay their 2018 property taxes in December following announcements about changes to the 2018 federal tax law. But the IRS was unclear in a statement on its website as to whether prepaid taxes in Illinois would be considered deductible for the 2017 tax season payable in 2018.

Roskam wrote the IRS, and a response came on Tuesday, March 27, in a letter from Drew Maloney, assistant secretary for legislative affairs.

“As a general matter, taxpayers are permitted to deduct 2017 property taxes that were both paid and imposed in 2017,” Maloney said.

Roskam’s and Hultgren’s news releases restated the conclusion more definitively.

“The United States Treasury agreed that the advisory does not apply to Illinois,” they said. “Taxpayers in Illinois are therefore able to deduct without a cap any prepaid property taxes submitted in 2017.”

The rush to prepay in Kane County took place because the new tax law, enacted in December, caps the state and local tax deduction at $10,000 starting for the 2018 tax year.

The last day to file income taxes this year is April 17.

Letter From The Department of the Treasury

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