The Internal Revenue Service is preparing to block attempts by California and other states to help their residents avoid a new limit on the deductibility of state and local taxes included in the Republican tax overhaul.
The IRS and the Treasury Department said Wednesday they would issue proposed regulations “in the near future” addressing legislation in states that would allow taxpayers to claim a charitable deduction for their state and local tax payments above the $10,000 limit set in last year’s tax law.
“Despite these state efforts to circumvent the new statutory limitation on state and local tax deductions, taxpayers should be mindful that federal law controls the proper characterization of payments for federal income tax purposes,” the IRS and Treasury Department said.
California and New York are among the states that have been looking for ways around the limit on state and local tax deductions that Republicans included in the tax cut legislation that took effect on Jan. 1.
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