By LINDA MOSS
Claudia Erwin on Wednesday became one of the hundreds of Montclair residents who during the past week or so have trekked to the Township Tax Collector’s Office to prepay their 2018 property taxes.
Erwin, her husband Brian and their son Darius, like many other township dwellers, came to Montclair’s Municipal Building looking to take action before next Monday, Jan. 1, when new tax laws championed by President Donald Trump take effect.
Under the changes in the tax code, people who live in states with high local taxes will no longer be able to deduct them from their federal taxes. That’s a double whammy for Montclair, which has some of the highest property taxes in New Jersey, which in turn has some of the highest property taxes in the nation.
Montclair’s situation is even more complex than other municipalities because the township is undergoing a revaluation that will likely change both the tax rate and property assessments for many residents next year.
The changes to the federal tax code will limit to $10,000 the amount of state and local taxes that can be deducted from federal income tax returns. By prepaying 2018 taxes, residents are hoping to be able to deduct them fully. The Erwins live in the South End, have been in town for nine years and pay more than $10,000 annually in property taxes. They were advised to prepay.
“We did the homework,” Claudia Erwin said. “I talked to my accountant. I talked to my mortgage lender, because I think there’s a lot of confusion as to people are thinking if it [their property-tax money] goes into a escrow account there is nothing you can do.”
For the past week Township Tax Collector Lidia Leszczynski said that here department has been inundated with emails, phone calls and visits from residents who want to prepay their taxes at a rate of 50 to 100 a day. The tax overhaul was passed by Congress last week and signed into law by Trump.
“It really started last week, the 18th,” she said. “Chaos started. No other word for it … and it’s just getting crazier.”
In order to keep up with the demand and give residents extra time to take action, Leszczynski’s office will be open for five hours this Saturday, from 10 a.m. to 3 p.m., to accept payments.
So far the township has received “hundreds of thousands of dollars” in 2018 prepayments, according to Leszczynski.
It is a bit of a gamble to prepay the 2018 taxes, since so far there is no guarantee that residents will in fact be able to deduct them from their federal income tax returns, several experts warn. The new legislation passed last week doesn’t address that issue, and it will apparently will be a decision made by the Internal Revenue Service.
Others claim that residents will only be allowed to deduct money they pay for 2018 property taxes that they have received bills for so far, which in Montclair’s case is only the first and second quarter next year.
If they want to, residents can estimate their third and fourth quarter tax bills and prepay what they project their entire 2018 tax bill will be. In August, when the actual 2018 tax rate is determined, billing will be adjusted based on what property owners have prepaid, according to the township.
Leszczynski said that her office has received calls from residents seeking advice about what they should do, and they’re told it depends on an individual’s financial situation.
“We’re not accountants and we’re just in no position [to offer advice],” she said. “We can’t tell them if it’s in their best interest.”
“The new federal tax bill was signed into legislation Dec. 22, leaving little time for property owners to meet the end-of-year deadline if they are considering prepaying 2018 taxes,” said Mayor Robert Jackson in the Tuesday press release announcing that the tax collector’s office would be open Saturday.
“Given the recent influx of queries to the township regarding 2018 property tax prepayment,” the statement continued, “we decided to provide additional time on a Saturday for those residents and business owners who wish to pay their 2018 taxes in advance.”
Because of the pending revaluation – which will give Montclair a new assessment and tax rate – the township has a lot more variables to deal with in terms of local property taxes than other places, Leszczynski said.
And some residents just don’t have the financial wherewithal to prepay their 2018 bills in order to be able to deduct them, Erwin said.
“It puts a strain on a lot of people,” she said. ”Many people know they are gong to have to take a hit on the [tax deductibility] limit because they can’t afford to pay.”