Skip to content
Subscriber Only

IRS Warns Taxpayers About Tactics to Avoid Property Deduction Caps

  • Agency plans to propose regulations on charitable deductions
  • NY, NJ allow homeowners to declare tax payments as ‘donations’
Updated on

The Internal Revenue Service warned taxpayers to proceed with caution after states including New York and New Jersey approved workarounds involving charitable organizations to circumvent new federal limits on deductions for state and local taxes.

“Taxpayers should be mindful that federal law controls the proper characterization of payments for federal income tax purposes,” the agency said in a press release Wednesday, the first time it’s weighed in on the matter. The Treasury Department and IRS intend to propose regulations addressing measures that would allow homeowners to declare property taxes as charitable deductions, which are still unlimited, according to the IRS.