Countless taxpayers can cruise confidently into tax breaks on Jan. 19 – the beginning of the 2015 tax filing season – now that Congress has laid out an extraordinarily expansive PATH.
Yes, that’s an acronym for the “Protecting Americans from Tax Hikes Act of 2015.” Packed with dozens of deductions, credits and other tax saving devices, it was signed by the President on Dec. 18. So those breaks are ready for your tax return.
Taxpayers should like it, because Congress carved a wide path with this law. It cemented into law some tax cuts that were temporary and due to expire; at the least, it extended popular tax breaks through 2016.
We can’t point out all of them at one time, but here are some that we at EricJohn Ltd.think particularly will benefit you, our clients, as you drive into the 2015 tax season!
Now Permanent
State and local sales tax deduction: Option to itemize state and local sales taxes paid OR income taxes.
- Computer/technology costs: They qualify as education expenses.
- American Opportunities Act tax credit: This credit applies to as many as four years of post-secondary education. Its phase-out based on income also was enhanced through 2017.
- Employee mass transit passes: This fringe benefit from employer now enjoys a permanent exclusion from income to a set limit.
- Tax-free distributions to charities from retirement plans: Donations made from IRAs and other permanently are excluded from income to a limit of $100,000 per year.
Temporary Changes Through 2016
Mortgage debt exclusion for primary residence: Excludes discharge of debt from gross income.
- Mortgage insurance deduction: Premiums are treated as mortgage interest, subject to a phase-out beginning at $100,000 of adjusted gross income.
- Tuition deduction: Qualified tuition and related expenses remain deductible to past limits.
Changes in Depreciation, Retroactive To 2015
- Bonus depreciation continues: Depreciation percentage on qualified property is 50 percent through 2017, with lesser percentage through 2019.
- Section 179 expensing limitations: A permanent extension of $500,000 allowance with phase out to $2 million, primarily affecting small businesses. The new law also eliminated some caps and embedded computer software as an allowed expense.
These are just a few of the revisions in this new PATH. Want to delve deeper? Give Eric a call or an email.