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Sunday, June 17, 2018

State Bewilderment to TCJA - Podcast Too!

A State Tax Notes article of mine for 5/28/18 is titled, "Moving Past a TCJA State of Bewilderment." My focus is on a few states, notably, New York, where the governor and a few others made statements implying that the Tax Cuts and Jobs Act would harm the state and its residents.  Yes, some will pay more, but the vast majority will see a tax reduction.

Many new rules are at play including ones that may result in loss of deductions, such as capping the state and local tax (SALT) deduction to $10,000, but many will get new deductions, such as if they are self-employed or have rental income (the "199A deduction"). And the rates go down for everyone.

We are seeing some states enact workarounds to the SALT cap, including New York and New Jersey. Connecticut just enacted (SB 11) a new tax on partnerships and S corporations with a credit given to the owners - that starts now! (See information from CT Dept. of Revenue.) That's an interesting workaround. The IRS plans to issue regulations on whether these workarounds, including ones to donate money to a state fund to get a federal charitable contribution deduction and a state tax credit, work (Notice 2018-54).

I recently had the opportunity to record a "Simply Tax" podcast with BKD's Damien Martin on this topic - state tax workarounds (6/7/18).  Or see link on Apple Podcasts or link on YouTube. You can also find links to over 30 terrific podcasts Damien has produced on various tax topics - many on TCJA provisions.

What do you think? Should states be truly worried?

2 comments:

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