Details of the 2015 Tax Extender Legislation Just Passed by Congress

Today, December 18, 2015, Congress passed the Protecting Americans from Tax Hikes Act of 2015 (Amendment to HR 2029). Congress re-enacted all 50+ expired tax provisions that had expired at the end of 2014 by making some of them permanent, extending a few for 5 years, and extending the remainder for 2 years. The legislation also includes additional provisions that are related to the earned income tax credit, due diligence requirements for child tax credit and the education credit, and other administrative items that will affect tax preparers and taxpayers. This legislation will become law once the President signs it.

The tax provisions that expired at the end of 2014 were re-enacted as follows:

Provisions Made Permanent

Listed below are some of the most relevant provisions that were made permanent:

•  Educator Expense Deduction – Form 1040, line 23
•  Itemized Deduction for Sales Tax – Schedule A, line 5
• Increased Section 179 Expense Deduction Amounts

o   Maximum Deduction: $500,000

o   Maximum cost before the limit is reduced: $2,000,000

• Qualified Real Property category for Section 179 Expense Deduction

o   Maximum deduction: $250,000 for 2015, $500,000 after 2015

o   Qualified property includes: leasehold improvements, restaurant property, and retail improvement property

o   Added air conditioning and heating units beginning in 2016

• Exclusion from income for employer-provided mass transit benefits
• 15 year straight line depreciation for qualified leasehold restaurant and retail improvements
• Employer wage credit for active duty members of the uniformed services
• Research and Development Credit
• 5 provisions related to charitable contributions
• 4 additional provisions related to businesses
• 3 provisions related to real estate investment

The following provisions as they currently exist (but were set to expire at the end of 2017) were also made permanent:

•  Income threshold for Additional Child Tax Credit is permanently set at $3,000
•  Enhanced American Opportunity (Education) Credit
•  Expanded Earned Income Tax Credit

Provisions Extended for 5 Years (2015 – 2019)

• 50% Bonus Depreciation
• Work Opportunity Credit and New Markets Credit

Provisions Extended for 2 Years (2015 and 2016)

The remaining 30 expired provisions were extended for two years. Here is a list of some of the more relevant provisions for individuals:

• Exclusion of gain from income of foreclosed home mortgage debt (Form 982, line 1e)
• Tuition and Fees Deduction - Form 8917/Form 1040, line 34
• Nonbusiness Energy Property Credit – Form 5695, Part I
• Ability to treat mortgage insurance premiums as qualified mortgage interest
• 14 provisions related to businesses
• 12 additional provisions related to energy and conservation

Other New Provisions

The legislation also included what Congress is calling “program integrity provisions,” all of which go into effect beginning with Tax Year 2016 as follows:

• The due date for employers to file with SSA and IRS Form W-2s and 1099s will be January 31 beginning in 2017 for 2016 wage and information forms.
• The provisions expand paid preparer EITC due diligence requirements and the associated $500 penalty to include the child tax credit and the American Opportunity Education credit.
• The IRS can now bar an individual whom has fraudulently claimed the earned income tax credit for ten years.
• The IRS can bar an individual whom has intentionally disregarded the rules from claiming the child tax credit and/or the American Opportunity Credit for two years.
• The provisions prohibit a taxpayer from retroactively claiming the earned income tax credit, child tax credit, or American Opportunity Education Credit for any year the individual or qualifying child did not have a taxpayer identification number.
• There is an increase to the penalty for tax preparers who engage in willful or reckless conduct to the greater of $5,000 or 75% of the preparer’s income with respect to the return.
• There is now a requirement that the EIN of an educational institution be reported on Form 8863.

For more details and a complete list of all the provisions included in this legislation see the following:

• House Ways and Means Section-by-Section Summary of the Proposed “Protecting Americans From Tax Hikes Act of 2015 
• Joint Committee on Taxation’s Technical Explanation of  The Protecting Americans From Tax Hikes Act of 2015