The Internal Revenue Service (IRS) regularly works with the
US Department of the Treasury to determine tax law and make other important
decisions regarding taxation. Recently, the two departments combined forces to
come up with some proposed regulations regarding charitable contribution
deductions in cases where the taxpayer will receive a state or local tax credit
related to the contribution.
Understanding the Regulations
These proposed regulations most directly affect taxpayers
who make payments or transfer property to an eligible charitable organization.
In order for these taxpayers to receive a deduction, the proposed regulations
state that the taxpayer must reduce his charitable deduction by the amount of
any state or local tax credits that may be received as a result of that
deduction. This keeps taxpayers from getting a “double credit,” so to speak.
Of course, as with most things with the IRS, there are some
exceptions. For example, the rule does not apply in cases of dollar for dollar
state tax deductions. It also does not apply for tax credits of not more than
15% of the payment amount or the fair market value of any property being
transferred.
Remember, Proposed Means Not Yet Passed
As you can imagine, taxpayers have varied feelings on these
proposed regulations. However, it is important to note that, as of right now,
these regulations are merely proposed, which is not the same thing as having
actually been passed and approved.
Because the rules are still in the proposal stage, taxpayers can make public comments to the IRS to describe their thoughts on these proposed regulations. These comments can sometimes make a difference, so taxpayers with strong feelings on the matter are encouraged to speak up. Doing so can ultimately have a bigger impact on what ends up being passed than one might think.
No comments:
Post a Comment
I welcome your comments here :)