Posted on 05/24/2018 6:44:07 AM PDT by reaganaut1
WASHINGTON The Internal Revenue Service is preparing to crack down on states that try to circumvent a new limit on the state and local tax deduction, saying on Wednesday that it will not allow local governments to find creative ways to help individuals fully deduct those taxes.
The I.R.S. warning comes in response to states, like New York, that have looked for ways to blunt the impact of a new $10,000 cap on the state and local tax deduction, known as SALT. The cap, which was included in last years $1.5 trillion Republican tax overhaul, hit predominantly Democratic, high-tax states hardest since it limits the amount of state and local sales, income and property taxes that residents can deduct from their federal taxes.
That has prompted a scramble among local lawmakers to find ways to allow constituents who owe more than $10,000 to continue to fully deduct those taxes and avoid a tax increase.
The I.R.S. said it would not tolerate states that try to flout the law a stance that is likely to be challenged in court.
Despite these state efforts to circumvent the new statutory limitation on state and local tax deductions, taxpayers should be mindful that federal law controls the proper characterization of payments for federal income tax purposes, the I.R.S. wrote in a notice released on Wednesday.
The I.R.S. notice, which is a precursor to a formal guidance that will need to go through a review process, drew swift condemnation from state lawmakers.
New York was the first to take action to protect our residents from this hostile assault and ensure New York families werent being used as a piggy bank to pay for tax cuts for big corporations, Gov. Andrew M. Cuomo of New York, a Democrat, said.
(Excerpt) Read more at nytimes.com ...
A buddy of mine talked about a plan floating in NJ whereby property taxes are not stated as property taxes but half is “School donations” and deductible from property taxes.
Example: A $16,000 property tax bill can be cut in half if the person makes up to an $8,000 “school donation” and then only pays $8,000 in property taxes. Both $8,000 payments are federally deductible and the State gets the full $16,000.
“A buddy of mine talked about a plan floating in NJ whereby property taxes are not stated as property taxes but half is School donations and deductible from property taxes. Example: A $16,000 property tax bill can be cut in half if the person makes up to an $8,000 school donation and then only pays $8,000 in property taxes. Both $8,000 payments are federally deductible and the State gets the full $16,000.”
So by that rationale, if I make a ‘donation’ and can take it as a full credit off of my property taxes. Will that apply to ANY legitimate charity (like NRA Gun Safety Fund), or only specific ‘school donations’?
Of course, it would only be to the State government “donations”.
“Of course, it would only be to the State government donations.”
As long as they’re 501C3’s, NO PROBLEM.
LOL
yes. this has been tax law since the dawn of time (or at least as long as anyone can remember)..anything of value that you get back in return for your ‘contribution’ has to be subtracted therefrom before the remainder (if any) may be deducted from federal taxes
there’s no “IRS getting tough” about this, its been the same rule for decades. That IRS is putting out a little publicity about the rule is, however, probably a good thing under the circumstances
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