Key Tax Developments, Quarter 4

The beginning of a new year also means the start of another tax season! Once again, we bring you our quarterly update on tax code changes to keep you fully informed.

General

Tax Season: The IRS announced that tax season would begin as scheduled on Tuesday, January 19, 2016. E-file and paper returns for 2015 can now be submitted. The only bad news is that if you submitted an early paper return, your return will not be filed any earlier.

De minimis expensing safe harbor under capitalization regulations is increased: Expensing outlays for “de minimis” business expenses up to $5,000 formerly required an Applicable Financial Statement (AFS) when an invoice exceeded $500, but the safe harbor has been raised to $2,500 without an AFS. The change technically only takes effect for the tax year 2016 and beyond, but the IRS will not challenge uses of the new limit for prior tax years.

Deductions

Standard mileage rates down for 2016. The optional mileage allowance for owned or leased autos (including vans, pickups or panel trucks) decreased by 3.5¢ to 54¢ per mile for business travel after 2015. The rate for using a car to get medical care or in connection with a move that qualifies for the moving expense decreased by 4¢ to 19¢ per mile.

Affordable Care Act information reporting deadlines are extended. The IRS has extended the due dates for certain 2015 information reporting requirements under the Affordable Care Act. The IRS has also provided guidance to individuals who, as a result of these extensions, might not receive a Form 1095-B or Form 1095-C allowing them to establish that they had minimum essential coverage by the time they filed their 2015 tax returns.

Health coverage tax credit. The IRS provided guidance on claiming the health coverage tax credit (HCTC) for tax years 2014 and 2015, with particular emphasis on circumstances in which the taxpayer also qualifies for the Code Sec. 36B premium tax credit.

Additional deductions include:

• Deduction safe harbor for remodeling costs of retail and restaurant businesses
• Rules for ABLE accounts are liberalized
• Innocent spouse relief

Other new tax legislation

While in the past, some have chastised Congress for being gridlocked, there was a flurry of new laws containing tax provisions in the last quarter of the year:

• The Protecting Americans From Tax Hikes (PATH) Act (P.L. 114-113, 12/18/2015)
• The Consolidated Appropriations Act (P.L. 114-113, 12/18/2015)
• The Fixing America’s Surface Transportation (FAST) Act (P.L. 114-94, 12/4/2015)
• The Bipartisan Budget Act of 2015 (P.L. 114-74, 11/2/2015)
• The Protecting Affordable Coverage for Employees Act (P.L. 114-60, 10/7/2015)

Click here to view the full report, which is much more in-depth about the above deductions and new tax legislation.

If you would like advice on how these deductions and new tax laws may apply to you, contact Burkett Burkett & Burkett Certified Public Accountants, P.A. to learn more.