IRS Bars State SALT Cap Workarounds

The IRS rewards people who give money to charities, to a certain extent. It allows people who contribute to charities to deduct that money on their taxes as an itemized deduction, thereby reducing their overall taxable income. What that means is that they don’t pay taxes on the money they donated to the charity. Some states provide tax credits for charitable contributions.

This past year, the IRS updated regulations so that people who give to charity and claim a state tax credit are not able to deduct such contribution at the federal level.

Accounting for State and Local Tax Credits

In some cases, the IRS will allow taxpayers to increase the credit they get on their federal return for paying state and local taxes. The so-called SALT deduction can be increased in some cases to account for the charitable deductions that the taxpayer cannot claim on their federal tax return because of the state or local deduction they received.

The maximum SALT deduction is $10,000 for married couples, or $5,000 if you are married and filing separately.

Those who have already filed their tax return for 2018 and did not take advantage of this deduction can still file an amended return.

Working with a Tax Attorney

Sometimes, itemizing your deductions isn’t the best choice to maximize your refund (or minimize the taxes you owe). Sometimes, you may simply make mistakes in calculating your deductions that can cost you a lot of money. The tax code is so complicated that there are many opportunities to make mistakes. The best thing you can do is work with a tax professional like a CPA to prepare your return and get all the deductions and credits that you can.

Our attorneys represent clients in audits, tax litigation, and more. Each of our attorneys has worked for the IRS, so they have intimate knowledge of the tax code and of how the IRS prosecutes cases. Contact us in Arizona today to talk with an experienced tax lawyer about your case and to learn about your legal options. We’re ready to help you.

Silver Law PLC

410 South Rampart Blvd, Suite 390
Las Vegas, Nevada 89145
Office: 702-318-7130
Website: taxcontroversy.com

Silver Law PLC

7033 E. Greenway Pkwy, Ste 200
Scottsdale, AZ 85254
Office:(480) 429-3360
Website: taxcontroversy.com