The Protecting Americans from Tax Hikes Act of 2015 (PATH) is good news!
Protecting Americans from Tax Hikes Act of 2015 (PATH)
The Protecting Americans from Tax Hikes Act of 2015 (PATH) is good news! The Act prevents tax Increases by making some provisions permanent and extending other tax saving measures. It provides $629 billion of tax relief for families and business. It makes several measures permanent to create more predictability and certainty for individuals and Business. Americans will no longer have to worry each December if Congress will pass this series of short term extenders each year.
The following provisions are now made permanent:
Increased Section 179 Deduction –Taxpayers can now expense up to $500,000 of certain depreciable business assets with a $2,000,000 cap on total property placed in service. This is up from the previous limitation and threshold of $25,000 and $200,000.
15-year depreciable life for qualified improvements–The depreciable life of certain qualified leasehold, retail, and restaurant improvements is reduced from 39 to 15 years.
State and local sales tax deduction – Taxpayers have the option to take an itemized deduction for state and local sales tax in lieu of a deduction for state income taxes.
Small business stock exclusion – Allows the exclusion of 100% of the gain on certain small business stock for non-corporate taxpayers for stock acquired and held for 5 years.
Reduction in S-Corporation Recognition Period for Built-In Gains – Permanently extends the rule reducing the period an S corporation must hold assets following conversion from a C-corporation to avoid the tax on built-in gains from 10 years to 5 years.
The Research and Development Credit– The research and development credit has been permanently extended. Beginning in 2016 businesses with $50 million or less in gross receipts can claim the credit against the alternative minimum tax liability and certain small businesses may claim the credit against their payroll tax liability.
The following provisions are now extended through December 31, 2019:
Bonus Depreciation– The bonus depreciation percentage is 50% for qualified asset acquisition costs from 2015-2017. Bonus depreciation is then reduced to 40% in 2018 and 30% in 2019.
Work Opportunity Tax Credit – Extended through 2019. The work opportunity tax credit is modified to apply to employers who hire qualified long-term unemployed individuals. It also increases the credit with respect to such long-term unemployed individuals to 40% of the first $6,000 of wages.
For a full copy of the PATH Act, visit http://docs.house.gov/billsthisweek/20151214/121515.250_xml.pdf. If you have questions concerning the impact of the legislation on you or your business, please contact BCPA at 847-509-4100.
The Bill Helps Curb IRS Abuse
The bill contains additional IRS sanctions and controls including the authority to fire IRS employees who take politically motivated actions against taxpayers. It also requires IRS employees to respect the taxpayer bill of rights and prohibit IRS employees from using personal email accounts for official business.
The Bill Pumps Money into the Economy
The Bill pumps money into the economy by extending the the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC).
Every president over the last 40 years has expanded The EITC and CTC with bipartisan support. The refundable aspect of the CTC is similarly designed to encourage and reward work. These refundable working family tax credits allow parents to keep more of what they earn, stabilizing children and families far beyond the year the tax credits are claimed. Some studies show that the EITC improves child health and academic achievement, increasing the likelihood of college attendance and success in adulthood. Additionally, these tax credits pump money into local economies, helping to support local business.
In summary, the Protecting Americans from Tax Hikes Act of 2015 (PATH) makes tax law provision permanent and extended others thus creating a greater measure of predictability and certainty for individuals and Business and pumping additional funds back into the economy.
To schedule an appointment to implement this strategy and others within the context of your unique tax situation, Contact Brown CPA Group, Ltd., at (847) 509-4100.
About the author: Ken Smith is an Enrolled Agent and Senior Staff Accountant with Brown CPA Group, Ltd. We know that success means different things to different people. While a business owner strives to maximize profits, increase efficiency and plan for succession; an individual client is more concerned with tax planning, wealth management, retirement and estate planning. At Brown CPA, we work with you on the total picture. Together, we succeed.
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