Wednesday, May 3, 2017

Trump's State and Local Tax (SALT) Deduction Attack, It'll Cost You ...

... Especially if you own a home:
High-income blue staters aren’t happy about the potential loss of the state and local tax “SALT” deduction under Trump’s tax reform outline he released this week. That's because high-income taxpayers in high-tax states would feel it. Curious how much the loss of the deduction might cost you, compared to others? Take a look at the county-by-county map below and the tax return you just filed.
If you take the standard deduction, it doesn’t apply to you. If you’re one of the roughly one-third of taxpayers who itemize, look at Schedule A, Taxes You Paid. It lists real estate taxes (your house), personal property taxes (your car) and either state income taxes or general sales taxes (depending on your state). You might be surprised at how much these taxes add up if you didn’t focus on this when you filed. Say you have $40,000 in state and local deductions. That’s what would get added back into your income. If your rate is 25%, you’d owe $10,000 more under the Trump plan.
Next flip through your return and check for Form 6251, where you calculate if you owe the Alternative Minimum Tax form. If you owe AMT, you don’t get the full benefit of the state and local tax deduction—it’s what puts most people in the AMT in the first place. But it’s not right to say you don’t get any benefit. You’re comparing the 28% AMT rate without the deduction to the regular rate (35% or 39.6% for the highest-income taxpayers today) with the deduction, so you’re likely getting some benefit, says Joe Toce, managing director of Andersen Tax.
Read the rest HERE and follow links to related stories below:

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