{"id":400235,"date":"2020-12-15T12:03:12","date_gmt":"2020-12-15T17:03:12","guid":{"rendered":"http:\/\/www.marketnewsdesk.com\/?p=400235"},"modified":"2020-12-15T12:03:12","modified_gmt":"2020-12-15T17:03:12","slug":"media-alert-new-developments-on-the-state-and-local-tax-deduction-cap","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/media-alert-new-developments-on-the-state-and-local-tax-deduction-cap\/","title":{"rendered":"MEDIA ALERT \u2014 New developments on the state and local tax deduction cap"},"content":{"rendered":"<p>        <!--.bwalignc { text-align: center; list-style-position: inside }\n.bwlistdisc { list-style-type: disc }body {font:normal small Arial,Helvetica,sans-serif;color:#000;background-color:#fff;padding:24px;margin:0;} a img {border:0;} h3 {font-size:medium;color:#000;margin:0 0 1em 0; text-align:center;}-->  <\/p>\n<p class=\"bwalignc\"><b>MEDIA ALERT \u2014 New developments on the state and local tax deduction cap<\/b><\/p>\n<p class=\"bwalignc\"><i>Wolters Kluwer Tax &amp; Accounting looks at the current state of law on the state and local tax deduction cap since its enactment in 2017<\/i><\/p>\n<p>&#8211;(<a href=\"http:\/\/www.businesswire.com\">BUSINESS WIRE<\/a>)&#8211;<b>What<\/b>: The Tax Cuts and Jobs Act, enacted in 2017, imposed a $10,000 cap on the state and local tax itemized deduction, which until then did not have a limit. The increase in the standard deduction, also enacted in the Tax Cuts and Jobs Act, may have eased the pain for some taxpayers, however, the negative impact was substantial, particularly for wealthier taxpayers in high tax states. Since the enactment of the cap, several states have tried some workarounds to help their citizens who were adversely impacted by the federal cap.\n<\/p>\n<p><b>Why<\/b>: Some of those state workarounds may be rejected by the Internal Revenue Service (IRS) while others may work; at least one workaround recently received a blessing from the IRS:\n<\/p>\n<ul class=\"bwlistdisc\">\n<li>\nSome states have provided a credit against state income taxes for a contribution to a state-sponsored charity. The IRS permits this only if the credit is small enough as a percentage of the contribution or the taxpayer is under the $10,000 cap in any event\n<\/li>\n<li>\nAt least one state is permitting a new payroll tax payable at the entity level with employees receiving an offsetting income tax credit. The IRS has not addressed this approach yet, but concerns exist about its complexity and uncertainty\n<\/li>\n<li>\nSome states have filed lawsuits claiming that the cap violates the Tenth Amendment to the Constitution. The outcome of the litigation is still uncertain\n<\/li>\n<li>\nSome states permit a partnership or S Corporation to pay the state income tax instead of the individual. The IRS has issued a notice permitting this work around, but it appears to only benefit business owners and not employees\n<\/li>\n<li>\nThe incoming administration may give new life to efforts led by the Democratic representatives in Congress to repeal or modify the cap. Success may depend on whether or not the Democrats gain control of the Senate\n<\/li>\n<\/ul>\n<p><b>Who<\/b>: Tax expert Mark Luscombe, JD, LL.M, CPA, Principal Federal Tax Analyst at <a rel=\"nofollow\" href=\"https:\/\/cts.businesswire.com\/ct\/CT?id=smartlink&amp;url=https%3A%2F%2Ftaxna.wolterskluwer.com&amp;esheet=52348974&amp;newsitemid=20201215005789&amp;lan=en-US&amp;anchor=Wolters+Kluwer+Tax+%26amp%3B+Accounting&amp;index=1&amp;md5=ba0dc9372e7ad9b8f9140e9d6bf6e8ea\">Wolters Kluwer Tax &amp; Accounting<\/a>, can help explain the various efforts to work around the state and local tax deduction cap.\n<\/p>\n<p><i>PLEASE NOTE: The content of this alert has been prepared by Wolters Kluwer Tax &amp; Accounting for general informational purposes only. The information is provided with the understanding that Wolters Kluwer Tax &amp; Accounting is not engaged in rendering legal, accounting, or other professional services.<\/i><\/p>\n<p><b>Contact:<\/b> To arrange an interview with Mark Luscombe or other federal and state tax experts from Wolters Kluwer Tax &amp; Accounting on this or any other tax-related topics, please contact Bart Lipinski.\n<\/p>\n<p><img decoding=\"async\" alt=\"\" src=\"https:\/\/cts.businesswire.com\/ct\/CT?id=bwnews&amp;sty=20201215005789r1&amp;sid=flmnd&amp;distro=nx&amp;lang=en\" style=\"width:0;height:0\" \/><span class=\"bwct31415\" \/><\/p>\n<p id=\"mmgallerylink\"><span id=\"mmgallerylink-phrase\">View source version on businesswire.com: <\/span><span id=\"mmgallerylink-link\"><a href=\"https:\/\/www.businesswire.com\/news\/home\/20201215005789\/en\/\" rel=\"nofollow\">https:\/\/www.businesswire.com\/news\/home\/20201215005789\/en\/<\/a><\/span><\/p>\n<p>\nBART LIPINSKI<br \/>\n<br \/>847-267-2225<br \/>\n<br \/><a rel=\"nofollow\" href=\"mailto:Bart.Lipinski@wolterskluwer.com\">Bart.Lipinski@wolterskluwer.com<\/a><\/p>\n<p><b>KEYWORDS:<\/b> United States North America Illinois<\/p>\n<p><b>INDUSTRY KEYWORDS:<\/b> Other Government Finance Banking Accounting Public Policy\/Government Professional Services Fashion Retail Other Professional Services<\/p>\n<p><b>MEDIA:<\/b><\/p>\n<table cellpadding=\"3\" cellspacing=\"3\">\n<tr>\n<td><font face=\"Arial\" size=\"2\"><b>Logo<\/b><\/font><\/td>\n<\/tr>\n<tr>\n<td><img decoding=\"async\" src=\"https:\/\/mms.businesswire.com\/media\/20201215005789\/en\/716975\/3\/WK_H_01_Pos_RGB_2400_Color.jpg\" alt=\"Logo\" \/><\/td>\n<\/tr>\n<tr>\n<td><font face=\"Arial\" size=\"2\"><\/font><\/td>\n<\/tr>\n<\/table>\n","protected":false},"excerpt":{"rendered":"<p>MEDIA ALERT \u2014 New developments on the state and local tax deduction cap Wolters Kluwer Tax &amp; Accounting looks at the current state of law on the state and local tax deduction cap since its enactment in 2017 &#8211;(BUSINESS WIRE)&#8211;What: The Tax Cuts and Jobs Act, enacted in 2017, imposed a $10,000 cap on the state and local tax itemized deduction, which until then did not have a limit. The increase in the standard deduction, also enacted in the Tax Cuts and Jobs Act, may have eased the pain for some taxpayers, however, the negative impact was substantial, particularly for wealthier taxpayers in high tax states. Since the enactment of the cap, several states have tried some workarounds to help &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/www.marketnewsdesk.com\/index.php\/media-alert-new-developments-on-the-state-and-local-tax-deduction-cap\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;MEDIA ALERT \u2014 New developments on the state and local tax deduction cap&#8221;<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-400235","post","type-post","status-publish","format-standard","hentry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>MEDIA ALERT \u2014 New developments on the state and local tax deduction cap - Market Newsdesk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.marketnewsdesk.com\/index.php\/media-alert-new-developments-on-the-state-and-local-tax-deduction-cap\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"MEDIA ALERT \u2014 New developments on the state and local tax deduction cap - Market Newsdesk\" \/>\n<meta property=\"og:description\" content=\"MEDIA ALERT \u2014 New developments on the state and local tax deduction cap Wolters Kluwer Tax &amp; Accounting looks at the current state of law on the state and local tax deduction cap since its enactment in 2017 &#8211;(BUSINESS WIRE)&#8211;What: The Tax Cuts and Jobs Act, enacted in 2017, imposed a $10,000 cap on the state and local tax itemized deduction, which until then did not have a limit. The increase in the standard deduction, also enacted in the Tax Cuts and Jobs Act, may have eased the pain for some taxpayers, however, the negative impact was substantial, particularly for wealthier taxpayers in high tax states. 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