Tax Tip of the Week | No. 336 | The Tax Extenders in Detail

Tax Tip of the Week | January 6, 2016 | No. 336 | The Tax Extenders in Detail

Congress finally passed "The Protecting Americans from Tax Hikes Act of 2015”. This was the long anticipated bill that will finally extend more than 50 tax provisions that have left tax payers in doubt over the last several years.  One nice thing about this last-minute tax bill, unlike in prior years, is that many of the tax laws have been marked permanent. Others have been extended through 2019 and others through 2016.  So we will at least know what the tax laws will be for two whole years! The following is a summary of the major “Extender” changes:Permanent Changes:The Research & Development credit;Increased expensing limitations and treatment of certain real property as Section 179 property;The exclusion of 100% of gain on certain small business stock;Reduction in S corporation recognition period for built-in gains tax;The enhanced Child Tax Credit;The enhanced American Opportunity Tax Credit;The enhanced Earned Income Tax Credit;The deduction for certain expenses of elementary and secondary school teachers;The deduction of state and local general sales taxes;The special rule for contributions of capital gain real property made for conservation purposes;Tax-free distributions from individual retirement plans for charitable purposes;The charitable deduction for contributions of food inventory;The tax treatment of certain payments to controlling exempt organizations;Basis adjustment to stock of S corporations making charitable contributions of property;The employer wage credit for employees who are active duty members of the uniformed services;15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements;The treatment of certain dividends of regulated investment companies;The Subpart F exception for active financing income;The minimum low-income housing tax credit rates for non-federally subsidized buildings;The following provisions were extended and modified through 2019:Bonus depreciation, at 50 percent for 2015-2017 and phased down to 40 percent in 2018 and 30 percent in 2019;The Work Opportunity Tax Credit, modified and enhanced for employers who hire long-term unemployed individuals (unemployed for 27 weeks or more) to 40 percent of the first $6,000 of wages;The New Markets Tax Credit, providing $3.5-billion allocation each year through 2019, the carryover period for the credit has also been extended to 2024.And the following are revived and extended through 2016:Modification of the exclusion of mortgage debt discharge;Mortgage insurance premiums treated as qualified residence interest;The above-the-line deduction for qualified tuition and related expenses; and,Over a dozen incentives for energy production and conservation.You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.Rick Prewitt – the guy behind TTW...until next week.