PATH Act Passes: What you need to know

Once again, with the signature of the Protecting Americans from Tax Hikes Act of 2015 (PATH Act), many popular tax items have either been made a permanent part of the tax code or have been extended to 2016 and beyond. Here are the more commonly used tax savings items and their new status;
Teacher $250 deduction for qualified classroom expenses. Impacts: All qualified elementary and secondary educators. This deduction does not require itemizing and the provision is now a permanent part of the tax code. What’s new? Starting in 2016 you can also deduct the cost of qualified continuing education courses. Deduction for state and local general sales taxes (in place of state income tax deduction) as an itemized deduction.
Impacts: All taxpayers in states without income taxes who itemize deductions and taxpayers who have high sales tax obligations versus state income tax obligations. This provision is now permanent. Deductibility of home mortgage insurance premiums. Impacts: All qualified home-owners required to carry mortgage insurance by their lenders. This provision is extended through 2016. Tuition and fees deduction Impacts: All students now have an additional program to help reduce the cost of their education. This provision is now valid through 2016. 50% additional first year depreciation deduction and higher Section 179 expense limits. The new Section 179 annual expense limit is now $500,000 (up from $25,000 prior to the extension.) Impacts: All businesses who have acquired and placed qualified assets into service during 2015. The expanded Section 179 is now made permanent while the bonus depreciation program now runs through 2019. Tax-free deductions from retirement plans for charitable contributions. Impacts: All taxpayers over 70½ years old who make qualified charitable contributions of up to $100,000 directly from their IRAs. This provision is now a permanent benefit in the tax code.
There are many other changes in this tax law. Clarifications on the signed bill will become known over the next few months.

On January 30, 2016   /   Individual Income Tax, Tax News, Tax Tips