Can NJ Property Tax Payments Be Treated as Charitable Contributions? |
In an effort to protect homeowners who will lose part of their tax deduction because of the new $10,000 cap on state and local taxes, some New Jersey towns and members of Congress are proposing a workaround. The plan would work like this: Towns create charitable funds and give homeowners a credit off their property tax bills for all or most of what they donate to the fund. The towns would use the donations for the same purposes as property taxes, such as schools, police and snowplows. Proponents argue that 22 states already do a version of this. Opponents say that the proposals violate IRS rules because the donation is being given purely for the financial benefit of the donor.