Congress delivered some significant tax news to businesses and citizenry alike last week with tax-extender legislation. You may not have had a chance to pore over the new rules, but the accountants at Portland’s Albin, Randall & Bennett have. Here’s a summary, based on information available as of Monday:
FOR INDIVIDUALS
Extensions that were made permanent:
• The election to claim an itemized deduction for state and local general sales taxes, in lieu of deducting state and local income taxes, which had expired Dec. 31, 2014.
• The $2,500 American Opportunity Tax Credit, an enhanced version of the Hope education credit, had been scheduled to expire after 2017.
• The reduced earned income threshold amount of $3,000 for child tax credits. This provision had been scheduled to expire after 2017.
• The $5,000 increase for joint filers of earned income credit, scheduled to expire after 2017. It also makes permanent the increased 45 percent credit for taxpayers with three or more qualifying children. Under prior law, both had been available only through 2017.
• The deduction for elementary- and secondary-school teachers’ classroom expenses. It also indexes the $250 cap to inflation beginning in 2016 and includes “professional development expenses” within the scope of the deduction.
• Individuals age 70½ and older can continue to make tax-free distributions from individual retirement accounts to a qualified charity, with a cap of a maximum of $100,000 per taxpayer each year.
Two-year extensions:
• The deduction for qualified tuition and fees for post-secondary education.
• Excluding from income cancellation of mortgage debt on a home of up to $2 million through 2016.
FOR BUSINESSES
Extensions made permanent:
• The research and development tax credit, with specified increases in business-related qualified research expenditures and increases in payments to universities and other qualified organizations. It also increases the alternative simplified credit from 14 percent to 20 percent.
• The 100 percent exclusion allowed for gain on the sale or exchange of qualified small-business stock held for more than five years by non-corporate taxpayers.
• The five-year recognition period for built-in gain following conversion from a C to an S corporation.
Five-year extensions:
• Bonus depreciation extended through 2019 – at 50 percent for 2015-2017, at 40 percent in 2018, and at 30 percent in 2019.
The election to accelerate the use of Alternative Minimum Tax credits in lieu of bonus depreciation continues and increases the amount of unused AMT credits that may be claimed. Additionally, bonus depreciation is modified to include qualified improvement property.
• The Work Opportunity Tax Credit is extended through 2019 and enhanced for employers that hire certain long-term unemployed individuals.
• An allocation of $3.5 billion of New Markets tax credits for each year from 2015 through 2019 was approved.
Two-year extensions:
• The deduction for energy-efficient commercial buildings is extended through 2016 and energy-efficient standards are updated.
FOR BUSINESSES and INDIVIDUALS
• Credits for adding insulation, energy-efficient exterior windows, energy-efficient heating and air conditioning systems and other qualified expenses has been extended through 2016. A credit of up to 10 percent of qualifying expenses, capped at $500, is allowed.
• The Internal Revenue Service will start accepting individual, online tax filings Jan. 19, 2016, according to a news release from the agency. Mainers will get a little deadline cushion next year. Because Emancipation Day, a holiday celebrated in Washington, D.C., falls on Friday, April 15, the IRS is pushing the national deadline for filing to Monday, April 18. But that conflicts with Patriot’s Day here and in Massachusetts. So Maine filers have until Tuesday, April 19, to get their taxes in.
PLAYING MATCHMAKER
Could your business benefit from an intern?
If so, the University of Maine’s Foster Center for Student Innovation wants to hear from you. The center is looking for innovative Maine companies to participate in the Innovate for Maine Fellows program. The program connects the brightest Maine college students with exciting, growing Maine companies, according to a news release from the center. Applications will be accepted until Feb. 1.
Students chosen for the program attend a weeklong, mandatory “boot camp” that includes training in UMaine’s Innovation Engineering program, a systematic process for developing breakthrough innovations. Students will also learn about Maine’s entrepreneurial landscape and how to network.
The program offers paid internships that place students with companies to receive real-world job experience and training. UMaine handles all recruiting, screening, matching, hiring and initial innovation and workplace training. Academic year and summer interns are available.
Details are at foster.target.maine.edu.
Business Editor Carol Coultas can be contacted at 791-6460 or at:
coultas@pressherald.com
Send questions/comments to the editors.
