Posts Tagged ‘child tax credit’

Congress Gives Taxpayers An Early Christmas Present

Monday, December 21st, 2015

PATH Act Makes Several Key Tax Provisions Permanent

PATH Act Makes Several Key Tax Provisions Permanent | Rea & Associates | Ohio CPA Firm

Congress finally made good on its promise to make take a more definitive stance on the future of many popular tax provisions last week when members voted in favor of making many of them permanent. Other tax provisions received a temporary extension. Read on to learn more.

There is nothing like waiting until the last minute to complete a task. We’ve all been there and we all promise we’ll never do it again. Unfortunately (especially when it comes to determining the future of several valuable tax provisions) our government has fallen victim to the same bad habit.

Year after year, Congress promises to address the future of many expired tax provisions, and year after year they fail to make a definitive decision – opting only to pass legislation that extends the provisions for another year. In the meantime, taxpayers are expected to take on the impossible task of navigating the terrain amidst legislative uncertainty. Happily, things are about to change.

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Congress finally made good on its promise to make take a more definitive stance on the future of many popular tax provisions last week when members voted in favor of making many of them permanent. Other tax provisions received a temporary extension. The legislation, Protecting Americans From Tax Hikes Act of 2015 (PATH Act), is retroactive to Jan. 1, 2015, and provides taxpayers a level of certainty that they have been without for quite some time.

This legislation offers a lot of relief to individuals and businesses, alike. Here’s an overview of what you can expect moving forward.

Key Tax Provisions Made Permanent By The PATH Act:

  • 15-year recovery period for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements
  • Extension and modification of the research & development credit, including allowing certain small businesses to claim the credit against AMT liability and employer’s payroll (ie: FICA) liability
  • 179 expensing limitations and phase out increased to $500,000 and $2 million respectively
  • Exclusion of 100 percent of gain on certain small business stock
  • Extension of tax-free distributions from IRAs for charitable purposes
  • Earned income tax credit
  • Child tax credit

Key Provisions Extended Through 2019

  • Extension of the new markets tax credit in which Congress authorized $3.5 billion allocation of credits each year from 2015 until 2019
  • Extension and expansion of the work opportunity tax credit
  • Bonus depreciation is extended at 50 percent for 2015 through 2017, 40 percent for 2018, and 30 percent for 2019

Key Provisions Extended Through 2016

  • Extension and expansion of empowerment zone tax incentives
  • Two-year moratorium on the 2.3 percent medical excise tax imposed on the sale of medical devices
  • Extension of energy efficient commercial buildings deduction

In addition to the extension of key tax provisions, the PATH act also puts more scrutiny on the operations of the IRS. IRS agents will be held accountable for knowing and acting in accordance with the taxpayer bill of rights and prohibits the use of IRS business for political gain.

The passage of the PATH act is a huge victory for American taxpayers, and will allow them to partner more efficiently and effectively with their tax advisors on key issues in years to come without the uncertainty that has plagued them for many years.

Be sure to set up an appointment to speak with your tax advisor or financial planner to talk about how the PATH act will impact your ability to take advantage of tax planning strategies. Do you have questions about specific aspects of the PATH act? Fill out the form on the top, right side of this page to submit your question to Dear Drebit.

By Ashley Matthews (Dublin office)

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School’s Out For Summer, But Tax Credits Are Still In

Tuesday, May 26th, 2015

Summer is an exciting time for families. It’s a time to get outside and have fun hanging out by the pool or to catch fireflies in a jar at the end of a long day. For many parents though, the summer holiday is overshadowed by the need to find affordable childcare during your work hours. The good news is that your opportunity to claim the Child and Dependent Care Tax Credit doesn’t end at the last day of school. In fact, you may be able to claim a variety of summertime childcare expenses when tax season rolls around again. Check out the list below to familiarize yourself with this credit.

Read: Can My Summer Day Care Expenses Earn A Tax Credit?

8 Tips To Help You Claim The Child Care Tax Credit

  1. Child care must have been provided so that you (and your spouse if filing jointly) can work or actively look for work. Your spouse must also meet this obligation during any month in which the child was a full-time student or was physically and/or mentally incapable of self-care.
  2. You must have earned income. Earned income includes earnings such as wages and self-employment. If you are married filing jointly, your spouse must also have earned income. There’s an exception to this rule for a spouse who is a full-time student or who is physically and/or mentally incapable of self-care.
  3. Care must have been provided for dependent(s) younger than 13 years old. Your spouse or another dependent qualifies if they lived with you for more than have the year and are physically and/or mentally incapable of self-care.
  4. Qualifying child care expenses include those that are used to secure enrollment at a daycare facility outside the home or at a day camp. Expenses for overnight camps or summer school tutoring do not qualify. NOTE: If you pay someone to come to your home to care for your child or children, you may be a household employer. For more information, see IRS Household Employer’s Tax Guide.
  5. If your employer provides dependent care benefits, special rules apply. See Form 2441, Child and Dependent Care Expenses.
  6. The credit is a percentage of the qualified expenses you pay for the care of a qualifying person and can be up to 35 percent of your expenses, depending on your income.
  7. You can claim up to $3,000 of your total unreimbursed expenses you pay in a year for one qualifying person or $6,000 for two or more qualifying persons.
  8. Keep your receipts and records to use when you file your 2015 tax return next year.  Make sure to note the name, address and Social Security number or employer identification number of the care provider. You must report this information when you claim the credit on your return.

Email Rea & Associates to learn more about the Child and Dependent Care Tax Credit or other tax incentives you may qualify for.

By Denell Skelton, CPA (Coshocton office)

 

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What Tax Deductions and Credits Have Been Renewed for Individuals?

Monday, December 27th, 2010

Part of the recently passed Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 has extended many popular deductions and credits for individual taxpayers through 2012.  Many of these are part of the list of tax “extenders” that Congress has temporarily extended (usually at the last minute) for the last several years.  These provisions benefit taxpayers at various income levels. (more…)

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