Tax Breaks Slide in Under the Wire!
With less than two weeks to go in 2015, Congress gave both business owners and individual taxpayers a wonderful holiday surprise by passing an important piece of tax legislations. The PATH (Protecting Americans from Tax Hikes) Act, which was signed into law on December 18th, reinstated many important tax breaks that had expired at the end of 2014, making them retroactive to the first of the year. It extended some of the provisions of the original tax extenders legislation for periods of one to several years while making others permanent. In addition, it reduced the tax benefits of certain existing tax breaks while enhancing the effectiveness of others. Although the legislation contains tax benefits for individuals and businesses alike, businesses may well be the overall winner this time.
The following is list of some of the important tax saving measures contained in the PATH Act:
Permanent Tax Breaks:
- $500,000 Section 179 expensing limit
- Exclusion for small business stock gains
- Reduction in gains recognition period for S-Corporations
- Research and Development Tax Credit
- American Opportunity Tax Credit
- Depreciation tax breaks for certain restaurant, retail and leasehold properties
- Allowance for tax free food inventory contributions to charity
- Allowance for tax free IRA contributions to charity
- Provision for itemized deduction of state and local sales taxes
- Allowance for deduction of certain teaching expenses
- Enhanced Child Care Credit
Tax Breaks Extended through 2016:
- Exclusion for forgiveness of mortgage debt
- Energy efficiency tax credits
- Allowance for deduction of mortgage insurance premiums
- Deduction for certain tuition and related educational expenses
- Empowerment Zone tax incentives
Tax Breaks Extended through 2019:
- Work Opportunity Tax Credit
- New Markets Tax Credit
- Allowance for 50% bonus depreciation (reduced to 40% in 2018 and 30% in 2019)
While the tax saving opportunities included in the PATH Act are both significant and numerous, the passage of the bill just weeks before the end of the year leaves little time to claim the tax breaks it provides. The tax advantages contained in the bill are retroactive to January 1, 2015 but most require action before the end of the year in order to be included on the 2015 tax return. This means that timing is of the essence. Both businesses and individuals must act swiftly in order to claim the last minute holiday gift given to them by Congress with the passage of this important piece of tax legislation.
If your business is seeking business tax or business accounting solutions, our experienced professionals can provide you with the expertise you are looking for. Visit us today at www.businesstaxpreparation.com to learn more about our full range of business tax and accounting services. Contact us by email at info@businesstaxpreparation.com or by phone at (866) 676-9417 to receive a free, no obligation consultation.