In mid-December 2015, Congress extended tax deductions and credits that had been scheduled to expire.
Here are several you can benefit from as you prepare your 2015 personal and business federal income tax returns.
- Child credit. You can claim this $1,000 tax credit for each qualifying dependent child who was under age 17 at December 31. The credit, which reduces your tax dollar-for-dollar, is partly refundable but phases out as your income rises. Previously set to expire in 2017, the credit is now permanent.
- Education benefits. The expired above-the-line deduction for higher education tuition and related expenses was retroactively extended and is now available for both 2015 and 2016. In addition, the American Opportunity Tax Credit, a credit of up to $2,500, is now permanent. Both the deduction and the credit are subject to phase-outs as your income rises.
- State and local sales tax deduction. If you itemize, you can choose to during the year for state and local income taxes, or your total state and local sales taxes. This deduction has been made permanent.
- Depreciable property. Under code Section 179, you can expense most types of otherwise depreciable real and personal property used in your business. For 2015, the maximum amount you can expense is $500,000 of the cost of qualifying property you placed in service during the year. The $500,000 is reduced when the cost of the property exceeds $2,000,000. The law made these amounts permanent. Beginning in 2016, both will be adjusted annually for inflation.
- Bonus depreciation. In addition to Section 179, you can continue to benefit from the 50% bonus depreciation deduction for tangible personal property that you purchased and placed in service during 2015. Bonus depreciation was extended through 2019, though the percentage will decrease in 2018 and 2019.
- Work opportunity credit. Are you an employer? You may be able to claim a credit of up to 40% of first-year wages you pay to workers hired from targeted groups. The credit has been extended through 2019.
These are only a few of the tax benefits that were extended. Contact us today if you’d like more information.