SPRINGFIELD, Ill. (AP) — The U.S. Treasury has ruled that Illinois homeowners who prepaid their 2018 property taxes last year will receive the full state and local tax deduction.
Republican U.S. Rep. Peter Roskam of Illinois asked for the clarification following confusion caused by a December IRS advisory, which suggested that homeowners who prepaid without having their properties formally assessed could not deduct the payments.
The Treasury Department ruled that the IRS advisory doesn't affect Illinois homeowners because state property taxes are for assessments made the previous year.
"As a general matter, taxpayers are permitted to deduct 2017 property taxes that were both paid and imposed in 2017," Drew Maloney, the Treasury Department Legislative Affairs undersecretary, wrote to Roskam in a letter dated Tuesday.
Many homeowners rushed to make property tax prepayments at the end of last year when Congress announced that the new tax bill would eliminate the unlimited property tax deduction on itemized returns and replace it with a $10,000 deduction cap for 2018.
"I am very pleased that the IRS clarified this important issue for hardworking families in Illinois who prepaid their property taxes last year," said Republican U.S. Rep. Randy Hultgren of Illinois. "Since the Tax Cuts and Jobs Act took effect on January 1, Illinois individuals, families and small businesses are reaping the benefits of lower tax rates, a doubled standard deduction and a doubled child tax credit."