15 Jun Special Report on the Protecting Americans from Tax Hikes Act of 2015
What’s more, PATH was not a simple “extenders” act, continuing certain tax breaks for a year or two. On the contrary, PATH converted many tax code provisions from temporary to permanent, retroactive to the beginning of 2015. Therefore, you can have much more confidence in future tax plans regarding these provisions. (Other tax code provisions that had expired, or were scheduled to expire, were extended for two or five years, retroactive to 2015.) This issue of the CPA Client Bulletin covers some of the main tax rules that have been affected. If you have questions about these and other tax code items that were set to expire in 2015 or later years, contact our office for details.
Last December, President Obama signed the Protecting Americans from Tax Hikes (PATH) Act of 2015 into law. The new law contains several tax benefits for individuals and companies.
Deducting Sales Taxes
Taxpayers who itemize deductions on Schedule A of IRS Form 1040 can deduct some state and local tax payments from their income. Among the formerly impermanent tax deductions that are now permanent is the option to deduct sales instead of income taxes. Example: Marge and Nick Palmer always itemize deductions on their joint tax return. Generally, the Palmers deduct the state income tax they pay. In 2015, though, their income fell, and so did the state income tax they paid. The Palmers also have made some large purchases, paying steep amounts of sales tax. For 2015 and future years, the Palmers can deduct the sales tax they paid instead of the state income tax they paid, if the amount of sales tax exceeded their income tax.