A new tax bill was passed on December 18th, and it likely snuck right past without you realizing it. While the holidays raged on, a tax bill was passed in December that could bring you some tax season joy. Yes, there is joy to be had during tax season. Maybe.
The PATH Act (Protecting Americans From Tax Hikes) is a bill that extends and amplifies--even makes permanent--some tax breaks for American taxpayers. Small business owners know plenty well the ways of cutting costs--so here are some new tax breaks that could save you some money on your taxes for 2015.
Teachers can claim up to $250 for books and materials used in their classroom called "teacher classroom expenses." Nice news for your friends starting up the new semester post-holidays.
The American Opportunity Credit is now permanent. This allots up to $2,500 annually for 4 years of postsecondary education. Teachers teach on.
If you're a parent you may have heard about 529 Plans. These plans let you deposit up to $2,000 per year (per beneficiary) for your child's college fund. Now, you don't pay on capital gains when you withdraw money and put it towards educational expenses. Plus, the PATH Act made computers and internet access are considered educational expenses that can be included in this plan. Way to upgrade with the times, Government!
Public Transportation - you can exclude up to $255 from your income for employee provided mass-transit / van pooling passes. This balances out the difference between employer-provided parking solutions and mass-transit options.
Wonder how this bill affects your small business or startup? Read this excerpt from Forbes by Steve Parrish:
Newer businesses have enough revenue challenges without having to deal with high federal taxes. The new law enhances the tax-saving opportunities for these operations.
Under PATH, the dollar limit for Section 179 expensing is permanently moved from $25,000 to $500,000, with a $2 million overall investment limit before phase out.
Because the law also removes the $250,000 cap for qualified property, many businesses now have a reason to postpone larger purchases of such property until 2016. And while bonus depreciation is not permanently extended, it at least has been extended under a phase-down schedule through 2019.
Particularly for start-ups, there’s an important tax extender that has been made permanent – the 100 percent exclusion for gain on the sale or exchange of qualified small business stock held for more than five years by non-corporate taxpayers. This has proven a valuable way of funding some start-ups, and now that the law is being made permanent, it should become a more common financing tool.