ALBANY– Suffolk County has become the first in New York to adopt a charitable gift fund to reduce federal taxes for homeowners.
Through the “workaround” signed into law Monday, residents who make a charitable deduction equivalent to their property taxes will get to take a deduction on next year’s federal taxes and avert the $10,000 cap on state and local taxes.
County Executive Steve Bellone, a Democrat, backed the change even though the IRS warned last year that it would consider such charitable funds as tax evasion.
According to the state tax department, 46.3 percent of Suffolk taxpayers itemize their deductions and the average deduction came in at $31,251.
E.J. McMahon of the Empire Center for Public Policy said Suffolk’s move made no sense.
“The number of Suffolk itemizers and their average deduction in the past is irrelevant,” he said.
“Under the new law, there will be a significant reduction in the number of Suffolk County taxpayers itemizing deductions, because the standard deduction has been doubled to $24,000 for married joint filers.”
Before the Tax and Jobs Act of 2017, the standard deduction was $12,000.
“If the average deduction including uncapped SALT previously was $31,000, it suggests a lot of people won’t be itemizing any more,” he said.
“There’s no point in anyone giving to a supposedly charitable trust fund until the litigation is settled. If the IRS somehow ends up losing, Congress (including Democrats) will need to counter with some other change, because the potential reduction in federal revenues would be very large.”