IRS Moves to Block New York, New Jersey Effort to Skirt State Tax Cap

The video discusses changes in federal tax law, limiting state and local tax deductions to $10,000. It explores how states like New York and California, with high taxes, are affected. The video explains a workaround where excess taxes can be paid to state funds as charitable contributions, which are deductible. However, the IRS challenges this, claiming these aren't true charitable deductions. States are contesting this in court, arguing political bias. Potential workarounds and the role of Congress in changing laws are also discussed.

What is the maximum amount of state and local tax deductions allowed under the new federal tax law?

• $20,000

• $5,000

• $15,000

• $10,000

How do some states propose to classify payments over the $10,000 deduction limit?

• As healthcare costs

• As educational expenses

• As charitable contributions

• As business expenses

What is the IRS's stance on the workaround involving charitable contributions?

• They have no opinion on it

• They consider it partially valid

• They fully support it

• They reject it as not real charitable deductions

Which states are leading the legal challenge against the federal tax law changes?

• Texas and Florida

• New York and California

• Nevada and Utah

• Ohio and Michigan

What could potentially change the way the tax law works according to the last section?

• A change in the weather

• A shift in the political balance of Congress

• A new Supreme Court ruling

• An economic recession