Mark Kohler walks through a tax strategy where an S corporation pays your state income tax, then deducts it federally. Thirty-six states allow this workaround through their tax forms; fourteen don't. If your state permits it, you can bypass the $10,000 SALT cap.
There's 36 states that will provide the right tax form to make this happen. 14 states do not participate in this. Here's why the states matter and here's the strategy. Instead of you trying to deduct your state income tax that you paid, you got 30 grand you're paying to the state. Normally you would pay for that personally. You got a personal tax return. Well, the workaround is if you have an S corporation, you're going to let the S corp pay that 30 grand for you. So your S corporation writes off the 30,000 in tax that you're paying personally. This is important that the state tax return allows for this, and only 36 states comply with this or will provide for the strategy. So you write off the 30 grand on the federal return. It comes through the state tax return that you got a credit for paying this on the federal return for your S corporation.
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