by Tene Thomas, Tax Compliance Partner
Congressional lawmakers passed a massive government-wide budget deal this past Wednesday combining more than a trillion dollars in year-end spending with hundreds of billions in tax cuts for businesses, families and special interests of every kind; giving us just a bit more time to reduce your 2015 tax bill and plan for 2016.
Below is an overview of important tax provisions from the package.
An agreement to permanently renew a number of long-popular business and household tax breaks crystallized this year with the passage of the legislation. President Obama quickly signed the law which made many popular tax breaks permanent and extend others.
Key Business Friendly Provisions
- Research credit modified and made permanent.
- Bonus depreciation extended and modified through 2019.
- Increased §179 expensing limitations made permanent.
- Temporary exclusion of 100% gain on certain small business stock made permanent.
- Exclusion from income of discharge of qualified principal residence indebtedness modified and extended through 2016.
Individual and Family Provisions
The Bill contains numerous provisions that would benefit individuals and families. Some key tax provisions that have long been temporary would become permanent, while others would only get another temporary extension. Some of the key provisions that are being made permanent are:
- the enhanced child tax credit,
- the enhanced American opportunity tax credit,
- the enhanced earned income tax credit,
- the deduction of certain expenses for elementary and secondary school teachers, and
- the deduction for State and local general sales taxes in lieu of State and local income taxes.
Health & Compensation Planning
The congressional budget deal would provide relief from certain excise taxes under the Affordable Care Act.
The Bill would:
- Provide for a two-year delay on the excise tax on high-cost employer-sponsored health coverage (the “Cadillac” tax), meaning that the tax would first be effective in 2020 rather than 2018 as scheduled. The Bill would also permit the tax to be deductible as a business expense and require a study on the benchmark for the threshold measurement of the Cadillac tax.
- Provide for a one-year moratorium on the annual excise tax imposed on health insurance providers for calendar year 2017.
- Modify the filing dates of returns and statements relating to employee wage information and non-employee compensation to improve compliance.
- Permanently extend the ability of individuals at least 70 ½ years of age to exclude from gross income qualified charitable distributions from Individual Retirement Accounts.
- Allow a taxpayer to roll over amounts from an employer-sponsored retirement plan to a SIMPLE IRA.
- Clarifies the effective dates of Public Law 113-243 to allow certain airline employees to contribute amounts received in certain bankruptcies to an IRA without being subject to the annual contribution limit.
- Extends the relief providing an exception to the 10-percent penalty on withdraws from retirement accounts before age 50 to include nuclear materials couriers, U.S. Capitol Police, Supreme Court Police and diplomatic security special agents.
For a complete summary of the bill, please give us a call. We’re always here to help!