IRS to Crackdown on SALT Deduction Cap Workarounds
Posted on May 24, 2018 in News, State and Local Tax
The IRS intends to issue regulations pertaining to states’ attempts to subvert the state and local tax deduction cap.
- The Tax Cuts and Jobs Act imposed a $10,000 ($5,000 for married individuals filing separately) limit on state and local tax deductions for federal income tax purposes.
- Certain states, including New York, New Jersey, and Connecticut, have enacted legislation to allow taxpayers to claim a federal tax deduction in excess of the SALT cap.
- The pending regulations will emphasize that federal income tax substance-over-form principles, not state laws, dictate the characterization of the charitable contributions