Yes, it’s tax filing season again, already!
! And again for this year, we had some tax laws extended by Congress through 2016 or 2019, but some were actually made permanent.
So for the context of this article, we’ll discuss only those changes affecting your individual clients.
Summary of Individual Tax Provisions Made Permanent
- Charitable giving incentives:
- Taxpayers are now allowed to donate real property for conservation purposes.
- IRA owners over 70.5 years old may now make charitable donations directly to a qualified charity, without being taxed on the distribution amount up to $100,000/year.
- Itemized deduction for state and local sales taxes in lieu of income taxes.
- Teacher’s supplies deduction: Teachers will now have a deduction option for K-12 supplies expense up to $250/year.
- Enhanced earned income credit: The law made permanent the refundable incentive for low-income families, especially those with three or more children, and also increased the income phase-out ranges for married couples filing jointly.
- The Enhanced American Opportunity tax credit remains at the current level of $2,500 of the first $4,000 in educational expenses for four years of post-secondary education. The phase-outs still remain at $80,000 single and $160,000 married, filing jointly of income limits.
- Enhanced Child tax credit: The current law allows $1,000 credit per qualifying child with an additional refundable credit equal to 15% of the taxpayers’ earned income in excess of $3,000. This credit was set to expire beginning in 2017.
- Due to fraud, another permanent provision included in the new law enforces that earned income credits or child tax credits cannot be filed for in amended returns, claiming those credits for any year that the taxpayer did not have a valid social security number or ITIN.
Summary of Individual Tax Provisions Extended through 2019
- The new markets credit: An individual or corporate tax credit for making qualified equity investments in qualified community development entities.
- Bonus Depreciation: 50% immediate expensing is good through 2017, but it drops to 40% in 2018, and only 30% in 2019, before expiring altogether.
Summary of Individual Tax Provisions Extended through 2016