The U.S. Department of the Treasury has made clear that an advisory issued by the IRS does not address Illinois and, therefore, taxpayers in Illinois are not bound by the IRS guidance and are able to deduct their prepaid property taxes.
- On December 27, 2017, the IRS issued an advisory regarding pre-payment of 2018 state and local real property taxes in 2017.
- The advisory provides information and examples relating to whether a taxpayer who makes a pre-payment in 2017 of real property taxes for 2018 or later would be eligible to deduct the payment on his or her 2017 federal tax return.
- Illinois is unique in that property tax payments made each year are actually paying for the previous year.
- As a result, prepaid property taxes made at the end of 2017 were actually prepaying 2017 property taxes, not 2018.
- The United States Treasury agreed that the advisory does not address Illinois.
- Taxpayers in Illinois are not bound by the IRS guidance and they are able to deduct their prepaid property taxes