State and Income Tax Cap: Planning

FIRM1040 Blog

State and Income Tax Cap: Planning

August 5, 2018

 

Tax reform put the screws to your state and local income tax deductions. Many states disliked that and have been putting together workarounds.

 

But now the IRS is creating regulations to put the kibosh on your state’s creative plans.

 

In the absence of federal lawmakers changing their minds, your federal deductions for state income taxes face that $10,000 ceiling.

 

But you have planning opportunities to make more of your property taxes deductible by

 

  • creating or enlarging a home office,

  • establishing or expanding a rental activity inside your home,

  • having your trade or business activity incur the property taxes, or

  • capitalizing the property taxes.

 

If you are being hurt by the $10,000 ceiling and would like my help with making more of your property taxes deductible, please don’t hesitate to call me on my direct line at 973-339-7773.

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