Although we are still a small firm, due to many of our clients working remotely, we now have clients in all 50 states. Through this, we noticed a major opportunity for tax deductions/strategy for those that happen to live in states that have state income tax. If you live in TX, WA, FL, etc., you can skip this newsletter.
However, for those that live in states with income tax, such as California, New York, Illinois, Maryland, Virginia, Massachusetts, etc., this is very important.
The 2018 tax changes limited federal deductions for state & local taxes to only 10k. If you own a business (s-corp or partnership, which includes Multi-Member LLCs), and live in certain states, we can bypass the 10k cap on state tax for you.
The basic concept is as follows:
- The IRS no longer allows state & local deductions on your personal return in excess of 10k
- However, select states are now allowing it to paid from the business and then giving you a credit on the personal return, thus bypassing the cap
- If you owe over 10k a year in state taxes due to a pass-through corp, partnership, or Multi-Member LLC, we can elect to pay your personal taxes through the business and bypass this cap
Feel free to reach out through the contact form below if you have questions or are interested in having us implement this for you.
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