Certified Public Accountant

{2:30 minutes to read} On Friday, December 18, 2015, Congress passed the Protecting Americans from Tax Hikes (PATH) Act of 2015, which has some permanent effects for many taxpayers.

Whether you are aware of it or not, for most of the last decade, a number of tax credits and deductions had to be reinstated every year. They were usually voted on in December, retroactive for that year, which sometimes made planning impossible. Congress has now made a lot of these credits and deductions permanent.

Here is a list that applies to a large number of taxpayers:

  • The American Opportunity College Credit of $2,500
  • $250 Teacher Deduction for teachers who buy supplies and other items for their classrooms. This deduction will be adjusted for inflation each year.
  • The Earned Income Credit will be expanded, especially for people with 3 or more children
  • The Earned Income Credit gap between married individuals and single individuals is being decreased
  • Mass transit and parking exclusions for employees. Many employers have this free tax benefit package that is now being made permanent.
  • Sales tax deduction for taxpayers who pay more sales tax than they do income taxes which is true mainly for people who live in states without income taxes
  • A tax-free IRA transfer as a charitable contribution
  • Computer and technology costs will now qualify as education expenses for the American Opportunity College Credit as noted above

Some changes were not made permanent but were extended for 1 more year. One of those that applies to many people is the tuition deduction, as opposed to the tuition credit. The American Opportunity Credit was made permanent, but the tuition deduction was passed retroactively in 2015 and extended through 2016.

There were many business-specific items in the depreciation world that became permanent. Rather than get technical about those items, we would suggest you consult your tax advisor or feel free to call us at 914-682-7007 or email us at info@gannscpa.com.