2015 Tax Legislation Passed in Time for Christmas (and for Year-End Tax Planning)

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UPDATE: 2015 Tax Legislation Passed on December 18, 2015… just in time for Christmas, and for your 2015 year-end tax planning.

I expected Congress to pass legislation extending the 50+ key tax provisions (nick-named “extender tax provisions”), but my expectation was that it would be a one or two year extension.  That is what has happened over many years. I ranted that they needed to get to work and make these changes provision permanent, but knew the associated cost to be politically unpopular and doubted they would do it, or if they did, that the President would sign it.

I was wrong. I’m glad to be wrong.

On December 18th, the Senate passed, and the President signed,  the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act). This legislation makes many of the “extender” tax provisions permanent, and others provisions were extended several years with defined phase-outs. Still other provisions were extended just through 2016. As far as the tax provisions addressed in this bill, the overall report is good news and you can proceed with your 2015 year-end tax strategic planning.

Summaries of the provisions made permanent or extended are listed further below in this post.

An additional key component of this legislation is the delay of several Affordable Care Act (ACA) / Obamacare taxes (“Cadillac” tax, medical device tax and health insurer excise tax). These taxes were unpopular and Congress has delayed them for now. It is important to note that these provisions were key to controlling the costs of Obamacare and the delay is reported to add over a trillion to the debt if these taxes are extended too long.

Although I’m glad tax provisions are more permanent and we now have a position of knowledge for tax planning and outlining strategies, we have to acknowledge that the annual deficit and nation debt has to be addressed. It won’t happen until after this next presidential election (and maybe not even then), but Congress needs to completely overhaul our tax system and Obamacare.

 

Some of the more popular tax benefit items for individuals made permanent:

  •     IRA distributions to charity
  •     State and local sales tax deduction
  •     Small business stock gains exclusion
  •     American Opportunity education credit
  •     School teachers deduction for certain expense
  •     Enhanced child credit

Some of the more popular tax benefit items for businesses made permanent:

  •     Section 179 expensing – larger limits
  •     Accelerated depreciation for qualified leasehold-improvement
  •     Research credit

Tax Benefits extended through 2019

  •     Bonus depreciation
  •     Work Opportunity credit
  •     New Markets credit

Tax Benefits extended only through 2016

  •     Mortgage insurance premiums deductions
  •     College qualified tuition & expenses deduction
  •     Various energy-efficiency tax credits
  •     Mortgage debt forgiveness exclusion
  •     Empowerment Zone tax incentives

 

RICK

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