Have you sat down with your CPA to discuss the tax provisions resulting from the passage of the Protecting Americans from Tax Hikes (PATH) Act in 2015? This includes many business deductions that had expired, and it extends others until 2019. The PATH Act contains over 100 tax provisions, so your CPA will be able to tell you which you are eligible for, but here is a quick list from CPA Magazine.
Employment Credits Under the PATH Act
Work opportunity tax credit has been extended through 2019. Beginning in 2016, credit also applies for hiring the long-term unemployed.
Empowerment zone employment credit has been extended for 2015 and 2016.
Indian employment credit has been extended for 2015 and 2016.
Enhanced Tax Deductions for Charitable Contributions
Corporations can deduct their contributions up to 10% of taxable income.
Businesses can take an enhanced deduction for food inventory donations.
Write-Offs Under the PATH Act
Bonus depreciation, which applies to new (not pre-owned) property, has been extended through 2019. However, the 50% write-off for the cost of qualified property applies only for 2015, 2016, and 2017. In 2018, the deduction decreases to 40%; in 2019 it is 30%.
The $500,000 deduction limit and the $2 million cap on equipment purchases before the deduction limit is phased out have been made permanent. They had been set to revert to $25,000, and $200,000 in 2015. These amounts can now be adjusted for inflation.
For 2016 through 2019, bonus depreciation applies to qualified improvements, which can include restaurant or retail improvements as well as leasehold improvements; there is no longer a requirement that the improvement be placed in service more than three years after the building was first placed in service. The 50% percentage applies for 2015, 2016, and 2017. The percentage decreases to 40% in 2018 and 2019.
Starting with reporting for wages and nonemployee compensation in 2016, the transmittals to the Social Security Administration (for W-2s) and to the IRS (for 1099s) are due by the same date as furnishing them to workers (Code Secs. 6071 and 6402). In 2017, the deadline is January 31, 2017.
Extended for only 2015 and 2016, the deduction for commercial buildings that achieve certain energy standards is $1.80 per square foot.
Employers do not have to file corrected information returns if the error is de minimis. An error for any single amount not exceeding $100 (or $25 in the case of withholding or backup withholding) need not be corrected.
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Call or contact us today and schedule a meeting with one of our CPAs about tax planning for the coming year as it pertains to these new PATH Act provisions.
The full article from CPA Magazine can be found here.