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Recent Tax Changes That Will Affect Individual Taxpayers

The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) was passed by the US House and the US Senate and signed into law by the President on December 18, 2015.  Some of the provisions in the act are permanent and others are for a limited amount of time.

The following are some of the provisions that may affect you:

Charitable Distributions for IRA’s:

The PATH Act permanently extends the ability of individuals aged 70 ½ to exclude from income up to $100,000 per year of distributions transferred directly to a qualified charitable organization for 2015 and succeeding years.

American Opportunity Tax Credit: 

The Path Act makes the credit permanent.  The credit is increased to $2,500 per year for four years of post-secondary education.  A phase out starts at $80,000 for single taxpayers and $160,000 for married taxpayers.  Taxpayers with income in excess of the phase out amounts have a reduced amount of credit allowable.

Deduction of qualified tuition and related expenses:

The above the line deduction for qualified tuition and fees has been extended through 2016.

Deduction for elementary and secondary school teachers:

The above the line deduction for elementary and secondary school teachers’ classroom expenditures has been permanently extended for years after 2014.  The $250 deduction will be indexed for inflation for years starting in 2016.

Deduction of State and Local general sales taxes:

The election to claim an itemized deduction for state and local general sales tax has been permanently extended for 2015 and subsequent years.

Deduction of State and Local general sales taxes:

The treatment of mortgage insurance premiums as deductible qualified mortgage interest subject to AGI phase-out is extended for 2015 and 2016.

Exclusion of mortgage debt cancellation:

The Act excludes from income cancellation of mortgage debt on principal residence of up to $2,000,000 through 2016.

To discuss these changes and learn how they may affect you, contact LBA Haynes Strand today by clicking the button  below.