The Treasury Department and the IRS have essentially shot down efforts by several states to help their residents circumvent the $10,000 cap on the itemized deduction for state and local taxes (SALT). When the Tax Cuts and Jobs Act (TCJA), aka tax reform, was passed, it imposed a $10,000 limit on the SALT deduction; this limitation had a greater impact on the residents of states that imposed the highest taxes on their residents. As it turns out, the states with the highest taxes – income or property taxes, or a combination of the two – are all blue (Democratic) states; thus, many saw it as political retribution, causing some state leaders to seek a workaround. Ultimately, several affected states, including New Jersey, New York, and Connecticut, came up with similar schemes to skirt the $10,000 limitation. Here is how their workarounds were supposed to have worked. Federal tax law names state and local governments as Continue reading about States’ SALT Deduction Workarounds Shot Down
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