recent legistlation passed December 17 2015

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Recent legislation passed by congress this week (12/17) has accomplished some of the following:

  • Protected Americans from the Tax Hikes Act of 2015.
  • Renewed and made permanent important tax incentives.
  • Permanent enhanced Child Tax Credit.
  • Permanent enhanced American Opportunity Tax Credit.
  • Permanent enhanced Earned Income Tax Credit.
  • Permanent above the line deduction for teachers who buy school supplies (maximum $250 per year per teacher).
  • Permanent charitable deduction for real property donated for conservation purposes.
  • Permanent Research & Development Tax Credit.
  • Permanent Section 179 expense deduction. (this sets the amounts at $500,000 and $2 million respectively from the current amounts of $25,000 and $200,000).
  • Permanent is the itemized deduction for state and local general sales taxes in lieu of a deduction for state and local income taxes. This usually does not apply to those of us in MN or WI but plays an important part in states like FL or WA where state sales tax is assessed on purchases where there is no payment of state income taxes.
  • Delays for 2 years the so-called “Cadillac tax” on high-priced health insurance plans that was to begin in 2018.
  • Phases out bonus depreciation on new asset purchases.
  • Permanently extends the rule reducing 5 year rather than 10 year holding period for S corporation assets following conversion from a C corporation to avoid built-in capital gains.
  • Permanently extends the ability of individuals at least 70 1/2 years of age to exclude from gross income qualified charitable distributions from IRA accounts of up to $100,000 per taxpayer in any tax year.

This legislation will now have the Internal Revenue Service making changes to the filing system. These changes will pass down to our ability to process and file returns. We will keep you informed on the dates and returns that we will be able to file as the IRS makes this possible.

Rodney W Wicklund and Associates 2011