The situation wasn’t made any simpler by state lawmakers, who argued that the cap on the SALT deduction was intended to hurt states that tend to elect Democrats, and concocted a series of elaborate workarounds that were shot down by the Internal Revenue Service.
People with more money and thus more complicated tax returns tend to file later in the season, meaning that the triggering has just begun.
Tax Strategy
“A lot of my clients are very surprised by what’s happening,” said Ann Callari, tax partner at RotenbergMeril, an accounting firm in Saddle Brook, New Jersey. “That’s the nature of taxes. People hope for the best and don’t pay attention. They don’t notice until it affects them.”
In the meantime, plenty of taxpayers are expecting the worst.
Gail Rosen, a certified public accountant, said one client didn’t submit his charitable donations because he assumed that he would take the standard deduction. (He didn’t.) Others have been under-withholding, meaning they could get tax cuts but see lower-than-expected numbers on their refund checks. One client who benefited from a new deduction for business owners found her unexpected refund disorienting.
“She looks at me and says, ‘Oh my god, this is wonderful, who can I thank?’” Rosen said. “I said, ‘Trump.’ It was like she saw a ghost. She didn’t want to hear it.”
The Void
Real estate pros, nobody’s first call for tax planning, are stepping into the void. South Florida developers have set up sales offices in Manhattan, angling to lure tax-weary finance workers with the promise of sunshine and no state income tax. Local realtors are highlighting small changes in tax rates that can benefit home buyers who cross town lines.
As Chad Curry, an agent at the Michelle Pais Group at Signature Realty NJ, put it in a recent listing, “Close to Westfield but taking advantage of Mountainside’s low taxes.”