Happy new tax season. At least I hope it is happy for you… Congress has passed a Tax Extender Bill and made some of the temporary changes to tax law permanent, including the following:
Sales tax deduction as an alternative to state income tax deduction; the Enhanced American Opportunity Credit for college tuition; amounts for Child Tax Credit; increased amounts for Earned Income Credit; the $250 teacher supply adjustment will be indexed to inflation and include professional development expenses.
Other changes are in place for one more year: The $500 credit for non-business energy property; mortgage insurance premium deduction; college tuition and fees adjustment, all of these will probably end on 12/31/2016, so they can be deducted on both the 2015 and the 2016 1040.
There are also tax law changes made permanent in the business provisions. An increased amount is still deductible for Section 179; the R & D tax credit was not allowed to sunset. Bonus depreciation is extended until 12/31/19.
On the down side, while business mileage rate for the 2015 return is 57.5 cents per mile, in 2016 this will fall to 54 cents per mile. Medical mileage deduction will be 23 cents per mile on the 2015 return but will go down to 19 cents per mile for the 2016 return deduction. Charitable mileage donations will remain at 14 cents per mile for both years.
Many other provisions have been affected by the Extender Bill in addition to the expected changes that are either indexed to inflation, such as the standard deduction, or that have changes written into the original law, such as the penalty for insufficient health care coverage.
More info: Contact Marlise Pederson at or 360- 267-1205.