Daniel HonanFounder, Profitable Painter CPA PLLC · I help painting contractors increase profits & cash flow while reducing taxes♦ Bookkeeping ♦ Tax

Painting Business Owners: Learn if your state applies to #PassThroughEntityTax

Name: Painting Business Owners: Learn if your state applies to #PassThroughEntityTax
Uploaded: 2023-10-12T14:32:56+00:00
Duration: 43 s
Channel: Daniel Honan
Description: The $10,000 SALT deduction cap from the Tax Cuts and Jobs Act hits high-income painters hard in states like California and New York. Many states now…

12 Oct 2023 · 1 min

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The $10,000 SALT deduction cap from the Tax Cuts and Jobs Act hits high-income painters hard in states like California and New York. Many states now offer pass-through entity taxes that let painting contractors pay tax at the business level instead, sidestepping the cap. Check if your state has one.

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Sounds like the Tax Cuts and Jobs Act was good for lower taxes generally, but on this specific area, or if you lived in a high tax state like California, New York, those types of states, this is not good. If you're in one of those high tax states, your Schedule A itemized deduction for state taxes is capped at $10,000, and that is not good. So if you are a higher income person, you're probably not in a good situation with this limitation here.
Sounds like. Right. If you live in Texas, Washington, New Hampshire, Tennessee, a state that has no income tax, then this doesn't really apply to you. But if you live in a high income tax or even a moderate income tax state, then this is something to look into. So as a response to this, a lot of states started coming up with what they call the pass-through entity tax.