Ever since the sweeping tax law changes brought about by the Tax Cuts & Jobs Act of 2017, high-tax states like Maryland have been scheming to circumvent the $10,000 cap on state tax deductions. After some trial and error, the U.S. Treasury and the IRS approved one of those schemes. Maryland is now allowing pass-through entities (PTE) to elect to subject themselves to an entity-level tax on behalf of Maryland resident members. The members that had Maryland tax paid on the PTE level will receive a corresponding state tax credit for the same amount. The benefit of this is that a PTE can deduct the tax paid on the PTE level, which will then flow to the member’s K-1. This is effective for any tax payments made after November 9, 2020.
A lot has been written on the new tax law, more formally known as the Tax Cuts and Jobs Act, and how it will affect taxpayers. But really, what most business owners want to know is the bottom line – the actual numbers – and how the TCJA will affect them personally. There is really no simple way to determine how the tax law will affect you without a comprehensive analysis of your tax situation. (No worries – we can do that for you! Contact us to talk with one of our tax experts.) We’re going to show you the numbers through a real life example. Let’s take a look behind the curtain, shall we?
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There’s one aspect of the new tax law that hasn’t gotten a lot of attention, but is worth considering — the $25 million average gross receipt.
Real estate is an important part of any comprehensive financial portfolio, but when it comes to utilizing tax credits, many property owners continue to lose out. Despite the benefits, finding and applying applicable tax credits can be difficult and overly complicated, meaning many property owners often fail to take advantage of credits they may qualify for. To help, we’ve assembled a list of three top federal and state real estate tax credits.