As we enter tax season this year, many Realtors® will hopefully get at least a small reprieve thanks to MAR’s advocacy.
In 2017, the Federal government instituted a new cap of $10,000 on state and local tax (SALT) deductions. Since then, many states have been seeking a means of restoring the SALT deduction benefit. Based on new IRS guidance, Massachusetts enacted a workaround in the FY22 budget. Here’s how it operates:
1.Pass-through entities (S Corps, LLCs) can opt to pay additional entity-level state income taxes.
2. State provides offsetting personal income tax credit for 90% of their share of the Pass-through entity excise paid by the entity.
Pass-through entities can elect to pay the excise when filing Form 3, Form 355S – Schedule S, or Form 2 and will confirm the election by submitting the new Form 63D-ELT. To find out more, check out the state’s FAQ page and working draft guidelines and be sure to discuss this with your accountant.