Tuesday, December 22, 2015

Special Alert: 2015 Tax Extenders

Special Alert: 2015 Tax Extenders 
President Obama has signed the Protecting Americans from Tax Hikes (PATH) Act which extends numerous tax provisions. Some important tax provisions have been made permanent, while others were extended through 2016 or 2019. The PATH Act adds in other provisions to mitigate "erroneous" education credit, child tax credit and earned income tax credit claims. Some of the most notable provisions include:
  • A permanent extension of the $500,000 §179 limit.
  • An extension for bonus depreciation through 2019.
  • A permanent extension of the general state and local sales tax deduction.
  • A permanent extension of the $250 educator expense deduction.
  • An extension for the exclusion from the cancellation of debt of qualified principal residence indebtedness through 2016.
  • The research credit.
  • A requirement that a tax preparer exercise due diligence, similar to the earned income tax credit, for the American opportunity tax credit and child tax credit, with similar penalties for failure to do so.

  • By signing into law the Tax Extenders bill, President Barack Obama extended over 50 provisions in the tax code due to expire. 
    • If your house was foreclosed, and the foreclosure sale did not satisfy the mortgage debt, there is an exclusion for the mortgage debt that is cancelled as a result of the foreclosure.
    • Tuition deduction, aimed at students pursuing higher education, e.g. Master's or PhD degrees, is a deduction up to $2,000 or $4,000, subject to income thresholds.
    • Earned Income Tax Credit (EITC), an antipoverty program set to expire in 2016, is extended permanently. 
      • EITC is intended to encourage workers with children. 
      • Max credit for families with 3 or more children has been raised from 40% to 45%.
    • American Opportunity Tax Credit (AOTC) is extended permanently, AOTC is a benefit for college students, who can claim a tax credit of up to $2,500 per academic year subject to income limitations.
    • "Teacher Deduction" is made permanent, which allows teachers to deduct up to $250 of their personal expenses spent on school supplies for their classrooms.
For a list of the 50 provisions, visit the Journal of Accountancy for more detailed information.
National Association of Tax Professionals
Journal of Accountancy