Now that President Biden has signed the Inflation Reduction Act of 2022, its safe to comment on some of the provisions. One part of the legislation that has received a lot of attention is an increase in funding for the Internal Revenue Service, and the expectation that the IRS will be hiring a stated 87,000 new employees.
Currently, California is ranked 48th out of the fifty states for tax friendliness by the non-profit Tax Foundation. New Jersey and New York are the only two states that have higher tax burdens on their residents than we do.
Years ago (I’m dating myself here) filing a tax return and paying your taxes through the US mail was the only option unless you wished to personally visit an IRS office and witness your tax dollars at work. Even private mail services such as FedEx were not preferred as they did not confer proof of mailing that was acceptable to the IRS.
As followers of this blog will recall, I’ve written many times about the State and Local Tax (SALT) cap for itemized deductions. Individual Taxpayers have been limited to a maximum amount of $10,000 in deductions for this category regardless of how much they actually spend in a year on state income and property taxes.
Given all the proposals floating between Congress and the President’s office these days, how does one know what to do to minimize you and your family’s tax burdens?
Just to jog your memory, you will recall that one of the most contentious provisions of the Tax Cuts and Jobs Act of 2017 was to deny individuals an itemized tax deduction for state and local taxes (SALT) paid in excess of $10,000.