What’s up with the IRS Proposed Changes to Treatment of Tax Credits?

Are you wondering what ever happened to the IRS proposal to reduce the federal deduction with tax credits? We thought you might be. You will recall Montana Nonprofit Association submitted comment on the proposed regulations in October and a hearing was held in Washington DC on November 5. The final rules are not out yet, but once enacted, they will likely go into effect  as of August 27. Though the ultimate outcome is unknown, donors and investors would be wise to assume the rules will go through as originally proposed. The new regulations, if passed, will reduce the deduction received for a charitable donation associated with a tax credit benefit by the amount of the credit received. With the doubling of the standard deduction for non-itemizers that came with tax reform, charities are already wondering how donations will be impacted at year end. The proposed IRS regulations are another hit on philanthropy in Montana. Although intended to decrease the use of State and Local Tax (SALT) workarounds that have been put in place since tax reform was enacted, the new regulations will also impact already existing credits such as the Montana Endowment Tax Credit.

Leave a Reply

X
X