A major tax bill has been signed at the federal level, and we have some details as to which tax laws have been extended by this bill. There are over 50 tax laws that needed to be extended, so as soon as we have rest of the information on what’s in this new tax law we’ll be making that information available on this website.

The changes we do know about at this point for the 2015 tax year are as follows:

  • The 2015 Personal Exemption increases to $4000.
  • The Foreign Income Exclusion for 2015 is $100,800.
  • The Standard Deduction for 2015 is $6,300 for Single taxpayers, $12,600 for Married Filing Joint taxpayers.
  • Itemized Deductions limited for relatively high income taxpayers; for Single taxpayers they begin to phase out when AGI reaches $258,250, for Married Filing Joint taxpayers when AGI reaches $309,900.
  • Penalties for Information Returns not filed, such as 1099’s, have gone from $100 to $250 per return, effective January 1, 2016.
  • Claiming a Qualifying Child is determined by age (under age 19 or full-time student between 19 and 24); must live with the taxpayer for over half the tax year; must provide over half the child’s support.
  • Claiming a Qualifying Relative is determined by relationship (must be related); must live with the taxpayer for over half the tax year; must not have their own income of $4000 or over; must provide over half the relative’s support for the year; must not be the qualifying child of the taxpayer or any other taxpayer for the tax year.
  • Rates for Capital Gains and Dividends 0% for taxpayers below the 25% bracket; 15% for those below the 39.6% bracket; 20% for those in the 39.6% ordinary tax bracket. For California, Capital Gains are taxed at the Ordinary Income Tax Rates. Short term gains are taxed at Ordinary Income Tax Rates for federal returns, so it’s best to hold stocks over a year to take advantage of the lower rates.
  • The enhanced American Opportunity Credit has been made permanent, which helps students paying tuition to educational instutions.
  • The enhanced Child Tax Credit has been made permanent.
  • The Mortgage Insurance Premium Deduction, which can be taken as mortgage interest has been extended through 12/31/16.
  • The enhanced Earned Income Tax Credithas been made permanent.
  • The $250 Educator Credit has been made permanent. Starting in 2016 the $250 will be indexed to inflation and will include professional development expenses.
  • The exclusion for personal residence Cancellation of Debt Income has been extended through 12/31/16.
  • Election for itemizers to deduct Sales Tax instead of State Income Tax has been made permanent.
  • Contributions of real property for Qualified Conservation Purposes has been made permanent.
  • The Tuition Deduction has been extended to 12/31/16.
  • IRA Transfers to Charity in lieu of Required Minimum Distributions has been made permenant.
  • Businesses will be allowed to take Bonus Depreciation of 50% for qualified purchases, and that has been extended through 2017; for 2018 it will be 40%, and for 2019 it will be 30%.
  • Businesses will be allowed to use a 15-year recovery period for qualified leasehold improvements, and that has been made permanent.
  • Business will be allowed to expense up to $500,000 for Section 179, and that has been made permanent.