YEAR-END TAX LEGISLATION

YEAR-END TAX LEGISLATION

In mid-December, Congress passed, and President Obama signed, the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act).  Many helpful tax provisions which had expired are now made permanent by PATH.

 

The above-the-line deduction for educator expenses was not only made permanent, but enhanced in two ways.  The $250 maximum amount will be indexed for inflation in tax years ending after 2015.  Qualifying expenses will now include costs incurred in taking professional development courses.

 

The deduction for state and local sales in lieu of state income tax is here to stay.  You can deduct either sales tax or income tax, whichever is greater.  No need to keep track of the sales tax you spend;  the IRS provides a table of average sales tax based upon your income level.

 

Taxpayers who are at least 70 ½ years old can transfer an IRA distribution directly to a charity as a contribution.  The advantage here is keeping your adjusted gross income low while still taking your mandatory distribution.

 

Other individual credits which are now permanent include:

Enhanced Child Tax Credit

American Opportunity Tax Credit for higher education

Earned Income Tax Credit for taxpayers with three or more qualifying children

 

Businesses also reap rewards with the Section 179 annual depreciation limit permanently set at $500,000 in fixed assets, including special provisions for real estate, leasehold imp

improvements, computer software, and heating & air conditioning units.

 

If you have questions on how this legislation will impact you, please call to set up an appointment today.