Just about one year ago, we had a similar blog post about the 2014 Tax Increase Prevention Act. This year, the Protecting Americans from Tax Hikes Act of 2015 (“PATH”) was signed into law on Friday, December 18. Similarly to last year, certain provisions of the tax code had expired and are just now being extended to apply for the 2015 tax year. Most notably in this year’s bill, some of the provisions that have been expiring annually have now been extended “permanently.”
In total, the bill is 233 pages. The Ways and Means committee was kind enough to publish a summary of each section. I am only noting a few of the most frequently discussed provisions. One of the provisions that has been made permanent is the IRA Charitable Rollover, the subject of a prior post questioning whether it would be extended. Taxpayers have the ability to roll their Required Minimum Distribution (RMD) directly to a charity, avoiding the funds from being taxed as income not only in 2015, but also for future years. This is now a permanent provision (unless the provision is later removed).
Other deductions or credits were also made permanent, including:
- Research and Development Tax Credit
- Enhanced American Opportunity Tax Credit
- Enhanced Earned Income Tax Credit
- Child Tax Credit
- Deductions for certain expenses of elementary and secondary school teachers
- Deduction for State and Local Sales Tax (instead of state and local income tax)
Some provisions were extended to not only apply for 2015 but also for 2016:
- Deduction for mortgage insurance premiums
- Above-the-line deduction for qualified tuition up to $4,000
- Exclusion of cancellation of debt income for your principal residence
You may remember in prior years these last minute extenders delayed the start of tax season, but not this year. The IRS has had a chance to review the tax extenders and announced Monday the IRS will begin accepting individual returns as planned, beginning January 19, 2016.