The $10,000 SALT Limit and the Rental Real Estate

The $10,000 SALT Limit and the Rental Real Estate

                Under the recently enacted Tax Cuts and Jobs Act, State And Local Tax (SALT) deductions are limited to $10,000.  How does this affect the individual taxpayer?

QUESTION:  Are SALT payments made on my rental real estate subject to the $10,000 cap?

ANSWER:  Generally, under the old law, all SALT payments were deductible.  However, the new law caps deductible SALT at an aggregate of $10,000 for individual taxpayers.

OF SALT, TAXES & MORTGAGES…

OF SALT, TAXES AND MORTGAGES…

Do you pay State and Local Taxes (SALT)? If you live in any of New York, California, New Jersey, Connecticut, or any other of the so-called high-tax states, you likely pay more than the national average in SALT.  Prior to 2018, you were allowed to itemize all of your SALT payments on your federal tax returns.  However, the recently passed law, the Tax Cuts and Jobs Act, curbs the deductibility and otherwise affects you disproportionately, compared with the rest of the country.   The changes to the deduction of State and Local Taxes (SALT) on federal tax returns are generally as follows

AN ANALYSIS OF THE TAX CUTS AND JOBS ACT

January 2018

 

AN ANALYSIS OF THE TAX CUTS AND JOBS ACT

On December 22, 2017, after much, well-publicized legislative skirmishes, President Donald Trump signed into law H.R. 1, otherwise known as the “Tax Cuts and Jobs Act.”   Provisions affecting individuals are generally effective beginning December 31, 2017 and expire on December 31, 2025.  Most business-related provisions are permanent and are effective beginning December 31, 2017.

This new law is, by all accounts, the most significant revisions to the U.S. tax code since 1986, affecting almost all individual and business taxpayers.   Our firm’s general assessment of the new law will therefore be a two-part series: this first part covers changes to individual taxpayers, and the second part will cover changes to business taxpayers.

Dealing With The IRS Part 2

Dealing with the IRS may be one of the most intimidating thoughts or notions for any American taxpayer. Everyone wants to know how to deal with the IRS when the time comes. Here are some tips if a taxpayer receives a notice from the IRS, thus necessitating some contact with the IRS.

The IRS typically sends a notice or a letter for a variety of reasons, including information about some specific issue related to a federal tax return or account, or information about changes to such an account. A notice may also request further information about some tax-related issue or request a payment.

Dealing With The IRS Part 1

Dealing with the IRS may be one of the most intimidating thoughts or notions for any American taxpayer. Everyone wants to know how to deal with the IRS when such unmentionable time arrives. Here are some tips for two common situations in which taxpayers may have to deal with the IRS. The first is the situation when a taxpayer simply has an inability to file a return and pay taxes; the second situation is the occurrence of an extensive delay in receiving an anticipated tax refund. Both may necessitate IRS contact. A qualified tax professional may offer the necessary guidance and assistance in these and many other tax-related scenarios.

Deducting Graduate School Expenses When You’re A Student

For full-time students attending graduate school, tuition and costs are exorbitantly high. It’s often difficult to maintain studies and still work to help defer some of the costs. For those who have not yet entered the professional workplace, is it possible to obtain any tax benefits for graduate school expenses? Is tuition for law or graduate school a deductible educational expense?

Deducting Graduate School Expenses When You’re Already Employed

Graduate students may deduct the costs of tuition and other fees under most circumstances. But what if an individual decides to go back to school after he or she has already entered the workforce, what, if any, tuition, costs, and fees are deductible?

Taxpayers may deduct the costs of qualifying work-related education as a business expense when the education leads to a degree, but only if at least one of the following two tests is met:

  • The education is required by an employer or by law to maintain present salary, status or employment. The required education must serve a bona fide business purpose of a taxpayer’s employer.

History Of The Internal Revenue Code

The last blog presented some basic information about the Internal Revenue Code (IRC or “Tax Code”), enacted by Congress in Title 26 of the United States Code (26 U.S.C. et seq). As all tax attorneys and accountants know, this “Tax Code” contains the federal domestic statutory tax law of the United States. This installment will review the history of the Internal Revenue Code.

U.S. statutes were not codified until 1874. Up until this time, congressional acts were not separately organized and published in separate volumes based on subject matter. Codifications of statutes first began in 1873 and created the Revised Statutes of the United States, approved June 22, 1874, effective for the laws in force as of December 1, 1873.

About The Internal Revenue Code

Federal tax law begins (and ends!) with the Internal Revenue Code (IRC or “Tax Code”), which was enacted by Congress in Title 26 of the United States Code (26 U.S.C. et seq). The Tax Code, formally known as the Internal Revenue Code of 1986, contains the federal domestic statutory tax law of the United States.

The Internal Revenue Code is organized by such topics as income tax, payroll tax, estate tax, gift tax, and excise tax. The Tax Code also contains rules for procedure and administration. As everyone soon finds out after earning their first paycheck, if not sooner, the agency responsible for administering its rules and associated regulations is the Internal Revenue Service, aka IRS.

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