As an update to my commentary several weeks ago, we have been watching closely legislation regarding renewing the so-called Tax Extenders, as mentioned, a series of tax provisions that have lapsed and been reinstated (i.e., extended) repeatedly over the past decade.
GOOD NEWS! New legislation passed last week, entitled the Protecting Americans from Tax Hikes (PATH) Act of 2015, will once again retroactively reinstate for 2015 the tax extenders that were renewed and then expired at the end of 2014. Unlike past tax extenders legislation, this time many of the important, most used provisions are PERMANENTLY renewed!! GREAT NEWS for tax payers and Financial Planners alike!
QUALIFIED CHARITABLE DISTRIBUTIONS (QCD) – MADE PERMANENT
Since 2006, taxpayers over age 70 ½ have been permitted to make a “QCD” of up to $100,000 directly from IRA to a charity. Although not claimed as tax deduction, the distribution from the IRA is NOT taxed as income making it a perfect pre-tax charitable contribution.
SCHOOL TEACHER EXPENSE DEDUCTION ENHANCED – MADE PERMANENT
Elementary and secondary school teachers are eligible for an above-the-line deduction for schoolteacher expenses, up to $250/year. This provision was scheduled to lapse at the end of 2015.
STATE AND LOCAL SALES TAX DEDUCTION – MADE PERMANENT
This new PATH tax extender will primarily benefit those who itemize their deductions and live in one of the seven states (Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming) that have no income tax.
As always, it is highly recommended to reach out to your accountant, tax preparer or most trusted financial advisor (CWM) to gain a better understanding of what tax “extenders” makes most sense to YOU! Once again, on behalf of everyone at Chatham Wealth Management, we wish you and your family a happy holiday season and a safe and prosperous New Year!