Tax Pros's Guide to the IRS SALT Deduction

Tax Pros’s Guide to the IRS SALT Deduction


As a dedicated tax professional, staying well-informed about the intricacies of the tax code is crucial to effectively serve your clients. One such important aspect is the IRS SALT Deduction, which can have a significant impact on your clients’ tax liabilities. In this comprehensive guide, we will explore the ins and outs of the IRS SALT Deduction, delving into its history, current limitations, and strategies for optimizing its benefits. By mastering the nuances of the SALT Deduction, you can provide your clients with valuable advice and enhance your tax resolution practice’s reputation for delivering exceptional results in an ever-changing tax landscape.


If this hasn’t happened to you already, get ready. It will. The IRS put a little SALT in the games of business owners who live in states with high income taxes and property taxes.


Some of these taxpayers are flooding tax preparers offices hoping to get ahead of what could translate as disaster next tax season. Others don’t have a clue. Are you prepared to help?


The new State and Local Income Tax (SALT) is bringing about controversial changes to deductions. The new tax plan is being followed up by a flurry of questions from taxpayers wondering where to turn as the deductions they have been used to taking are disappearing.


If your clients live in a state with high income taxes and property taxes, they stand to lose out under the new tax plan. Several of the write-offs they’ve counted on as a defense against rising income taxes will no longer be allowed.


How can you help your clients who might be affected?

All is not lost. There are a few options you can suggest. They are not one-size-fits-all and it will depend on the taxpayers’ unique situations.


It might be in the best fiscal interest of some taxpayers to move to a low tax state. They might save money but since those most likely to be affected are licensed professionals (accountants, doctors, brokers) they may be shackled to the state in which their licenses are valid. In these cases, a move would not be feasible.


You might suggest that some of your clients consider creating a non-grantor trust. As long as they stay within regulations by shifting their property tax payments and residences to a trust with its own SALT limit ($10,000). In some cases, more than one such trust may be created.

In other cases, you may want to suggest your clients consider any advantage to creating a non-grantor trust in no-tax states. They can then transfer their non-pension portfolio assets away from their money-sucking high-tax state and avoid paying income tax there.


No matter what state your clients own businesses, they will owe taxes. But if you can educate them about itemizing deductions you might be able to ask the IRS to hold the SALT, please.


The IRS has been giving taxpayers a run for their money this year. It’s essential that you stay on top of all the changes so that you can best serve your clients at tax time.


Just as you are there for your clients, IRS Solutions Software is here for you.



IRS Solutions Software gives you the confidence to provide services you may have been uncomfortable with in the past. Another benefit of membership is the training you get on our monthly case study webinars and classes.


Don’t Miss Out! Sign up with IRS Solutions Software .


By making sure your retired clients understand the new laws and are paying enough tax during the year you’ll both avoid a big surprise when you least need it next tax season.

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