Congress late in December 2015 once more extended the group of provisions commonly known as the “extenders.” The “extenders” are a group of tax laws, offering a wide variety of individual and corporate tax breaks and credits, that have repeatedly been extended for one to two years at a time, but are technically only temporary in nature since they have specific expiration dates.
Most of these laws once again expired at the end of 2014, but in the recently enacted Protecting Americans from Tax Hikes Act of 2015 (the 2015 PATH Act), the extenders have been revived and extended once more. Different this time, however, Congress made some of the changes permanent while other provisions were extended for two or five years.
The extended provisions that might be the most beneficial to individual filers include the following:
- Tax credits for low to middle wage earners originally enacted as part of 2009 stimulus package that were set to expire after 2017 were made permanent. These include (1) the American Opportunity Tax Credit, which provides up to $2,500 in partially refundable tax credits for post-secondary education, (2) eased rules for qualifying for the refundable child credit, and (3) various earned income tax credit (EITC) changes;
- The option to take an itemized deduction for State and local general sales taxes instead of the itemized deduction permitted for State and local income taxes made permanent;
- The $250 above-the-line deduction for teachers and other school professionals for expenses paid or incurred for books, certain supplies, equipment, and supplementary material used by educators in the classroom made permanent. Starting in 2016 this may also now apply to professional development expenses;
- The exclusion of up to $2 million ($1 million if married filing separately) of discharged principal residence indebtedness from gross income is now extended through 2016. The new law also modifies the exclusion to apply to qualified principal residence indebtedness discharged in 2017, if the discharge is pursuant to a binding written agreement entered into in 2016;
- Parity for the exclusions for employer-provided mass transit and parking benefits was made permanent;
- The deduction for mortgage insurance premiums deductible as qualified residence interest has been extended through 2016;
- The increased contribution limits and carry forward period for contributions of appreciated real property (including partial interests in real property) for conservation purposes is made permanent;
- The above-the-line deduction for qualified tuition and related expenses; extended through 2016; and
- The provision that permits tax-free distributions to charity from an individual retirement account (IRA) of up to $100,000 per taxpayer per tax year, by taxpayers age 70 or older made permanent.
We hope you find this information to be helpful as a starting point for your 2015 tax filings. As always, if you have particular questions about your specific tax situation, please feel free to call our offices to discuss.