Can you prepay next year’s state tax and deduct it from this years federal tax?

[SweetieJean · Accepted solution]

The conference report on the bill specifies that taxpayers cannot take a deduction in 2017 for prepaid 2018 state income taxes.

[SweetieJean]

Yes you can.

[Hal_Al]

You will need to get the State's 2018 payment voucher and mail it with your payment. Your state's 2018 voucher's may or may not be available in 2017 turboTax. You may be able to pay  at the state's web site. You may want to check with your state to verify that they are accepting payments.

We have verified that CA, WI & OH are. Let us know if your's does.

For how to enter in TurboTax, see https://ttlc.intuit.com/questions/4143060-where-in-turbotax-can-i-enter-estimated-state-taxes-for-ta...

[SweetieJean]

Or just overpay 2017, and then apply the excess to 2018 when you file.

[Hal_Al]

That doesn't work as well. Although your get the deduction in 2017. The refund (even if applied to your 2018 tax) is considered taxable income for 2018. The IRS put an end to that loop hole may years ago.

[Critter]

Either way gets you to the exact same place ... what you deduct in 2017 may be taxable in 2018.  So if your state will not allow an advanced estimated payment then the over payment of 2017 is the way to go.

Due to the possible tax changes for 2018 this is now a hot topic ... never heard of anyone wanting to do this in the past.