Congress renews expired tax breaks
You're probably familiar with tax provisions that expire on an annual basis, also known as "extenders." In mid-December 2015, Congress renewed the extenders that expired last year.
But this time, the extender renewal went further than making the breaks retroactive to the beginning of 2015. Some of the rules are now effective through December 31, 2016, some are effective through 2019, and some are effective permanently. Other provisions made changes to existing tax rules that were not part of the extenders.
What does that mean for you? For one thing, it means you can benefit from tax breaks such as bonus depreciation, expanded Section 179 expensing, and residential and business energy improvement incentives on your 2015 federal income tax return.
Here are three rules that are back in place for 2015 — and that were permanently extended, meaning they'll also be available in future years.
- State and local sales tax deduction. If you itemize, you can choose to deduct sales taxes you paid during 2015 instead of state and local income taxes. You can claim your actual expenses or use optional IRS tables.
- Educator expenses. If you're a teacher who spends your own money for classroom supplies, you can claim up to $250 of your expenses as an above-the-line deduction. You may be able to deduct additional out-of-pocket expenses if you itemize.
- Charitable donations from your IRA. Are you age 70½ or older? You can make a tax-free distribution of up to $100,000 from your IRA when the money is paid directly to a qualified charity.
Please contact us to discuss how this new law could affect you.