On December 18, 2015, the Protecting Americans from Tax Hikes Act of 2015 was enacted. It extended permanently more than 20 key tax provisions. As well, some of the tax provisions that expired at the end of 2014 were extended for five years. Here are just a few of the extensions:
- Charitable contributions can be made of IRA proceeds (up to $100,000 per year) for taxpayers aged 70.5 and older. It will allow IRA distributions including required minimum distributions to be made directly to a charity. This is good news for people living in states that do not allow charitable contribution deductions and those who do not itemize deductions at the federal level.
- Individuals will be permitted to deduct state and local sales tax as an itemized deduction, in lieu of deducting state and local income tax. This is beneficial for people living in states with no income tax.
- Starting in 2015, an annual section 179 depreciation expense is going to be available for businesses of up to $500,000 with the phase-out beginning at $2,000,000 of qualifying purchases.
- Off-the-shelf software is going to be eligible for section 179.
- Employers and payers of non-employee compensation are now going to be required to file W2s and 1099s annually by January 31, effective for filings beginning in 2014. Copies of W2s and 1099s are going to be required to be filed with the government at the same time they are due to employees. This is in an effort to stop identity theft and related tax fraud.
- Qualified distributions from 529 plans can now include computer software and internet access, beginning retroactively to January 1, 2015. Also, re-deposits into 529 plans for refunded tuitions will now be allowed. This is good news, not just for students, but also for parents, as typically they are the ones with the 529 plans in place for the students.
There are many more permanent changes — these are just a few of the highlights.