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Tax Extenders – 2015

Can I direct my required minimum distribution directly to charity?  Can I expense the equipment that I’ve purchased for my small business in 2015?  Is my business eligible to claim research and development tax credits?  These seem like easy questions to answer, but sometimes yes or no isn’t as simple as it sounds.  There are over 50 items, many deductions and credits, that are now referred to as “tax extenders” and that expired as of December 31, 2014.  These tax extenders have been agenda items year after year, and we’ve found ourselves watching the calendar as December 31 draws closer each year without answers as to whether or not the laws will be reinstated.  As recently as last year, these extenders were written into law on December 19th.  That allowed for less than two weeks to incorporate into a tax plan!

Among the individual tax extenders on hold are the following:

  • $250 deduction for teacher classroom expenses
  • Deduction for mortgage insurance premiums paid
  • Tuition and Fees deduction
  • Tax-free distributions from IRAs for individuals age 70 ½ or older, up to $100,000
  • Deduction for state and local sales taxes
  • Discharge of mortgage debt on principal residence excluded form income

Popular business tax extenders also include the following:

  • Research and development credit
  • Enhanced Section 179 limit for immediately expensing capital purchases
  • Work opportunity tax credit
  • Bonus depreciation
  • 15-year write-off for qualified leasehold improvements
  • Exclusion of 100% of gain on certain small business stock

If these are items that you commonly take advantage of, whether as an individual or as a business taxpayer, it certainly poses a challenge when planning for taxes.  Feel free to reach out to one of the professionals at DeMott & Smith to discuss the impact of the extenders and how we can help prepare a tax plan for all circumstances.

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Changes to Partnership and Corporation Filing Due Dates

On July 31, 2015, President Obama signed into law the “Surface Transportation and Veterans Health Care Choice Improvement Act of 2015”. While this may not seem like an important piece of tax legislature, the small print contained some of the most important changes to tax return filing due dates in decades. These revisions include changes to both partnership and C-corporation tax return due dates and revised extended due dates for other information based filings. Below is a summary of these changes and the dates these changes will become effective.

Form Original Due Date New Due Date
Partnership 1065 April 15th March 15th
C-Corporation 1120 March 15th April 15th
S-Corporation 1120-S March 15th March 15th
FinCen (FBAR) 114 June 30th April 15th

The above dates are effective for tax years beginning after December 31, 2015. Calendar year partnerships will now be allowed a six month extension of time to file their tax return, while calendar year C-Corporations will be allowed a five month extension. In addition, Form 114, which reports certain foreign financial information will now allow a six month extension of time to file, similar to the filing deadlines for individual tax returns. Partnerships with a fiscal year-end other than December 31 will now have a filing due date of 2 ½ months after the year-end; C-Corporations will now have a filing due date of 3 ½ months after the year-end, unless otherwise indicated below.

Other Changes

  • Special rule for C-corporations with fiscal years ending on June 30th, the above provisions will not be effective until the 2026 tax year.
  • Form 1041 will now have a maximum extension of time to file of 5 ½ months. The previous extension of time to file was five months.
  • Form 5500 (Annual Report of Employee Benefit Plan) will now have a maximum extension of time to file of 3 ½ months. The previous extension of time to file was 2 ½ months.

 

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