President Obama signed the Protecting Americans from Tax Hikes Act (PATH Act) in December of 2015 which extended or improved many deductions and credits that will help to reduce your 2015 income taxes. Some of the laws that were extended, beginning for the 2015 tax year, in a permanent fashion are:
- $1,000 child tax credit – possibly refundable depending on income
- The American Opportunity Tax Credit – for those with college age kids
- The $250 above the line deduction for elementary and secondary school teachers. This is now also set to index with inflation beginning in 2016.
- Itemized deduction for state and local general sales tax – a nice one for South Dakota residents with no state income tax!
- Tax-free distributions from IRAs direct to charities for up to $100,000 (must be older than 70.5 years old)
- The Research and Development tax credit, with a few minor changes for the better
- Section 179 expensing (or the direct write off allowance) for $500,000, also set to index with inflation beginning in 2016. This one still has a few limitations placed on it, so beware of those things as well.
There were also some parts of the tax law that were extended for 5 years instead of permanently and a few two year extension items. Contact your Ketel Thorstenson tax professional in Rapid City, Spearfish, Custer or Williston today for further guidance on how the newest tax laws may affect you. If you need assistance with your tax return preparation call today and make an appointment. We are here to help. We are your “Friends for Life.”