Obamacare-related issues were the marquee items affected by final congressional passage on Dec. 18 of more than 50 "tax extenders" — aptly-named extensions of tax breaks — in an annual legislative ritual that keeps millions of taxpayers in suspense until the year's final days.
The oft-discussed Cadillac tax, suspended for two years, is essentially a 40 percent, non-deductible excise tax on certain types of health insurance deemed under Obamacare to be too good and too expensive.
The 2.3% medical device excise tax will not be assessed until 2018. It had been heavily opposed by medical device manufacturers, by legislators with device manufacturers in their states, and among some consumer advocates who feared the tax would be passed on to health care consumers.
While these two are getting most of the attention, the extenders extend to a great many other areas.
Until now, Form W-2 wage and tax statement; and Form W-3, transmittal of wage and tax; and Form 1099-MISC, for miscellaneous income, have had a Feb. 28 deadline for paper copies and March 31 for electronically filed forms. The legislation moves up the deadline for these forms to Jan. 31 of the year after the calendar year to which the form applies.
At least part of the reason for the switch is that the tax refunds typically go out before the IRS received the forms, thus, the IRS couldn't compare the data. The plan, or hope, is that the deadline change will put a damper on the ever-increasing crime of refunds issued to returns filed using stolen identities.
An IRS Section 529 plan operated by a state or educational institution makes tax advantages available to save for higher education. Among other changes, if Section 529 funds are refunded after being used to pay tuition, it counts as a qualified expense if within 60 days the funds are moved into another 529 plan. This is true as well for 529 distributions or refunds made after 2014. Additionally, 529 definitions have added computer technology as a qualified higher education expense.
Small and mid-size businesses' first-year expensing for capital assets is permanently increased to $500,000, with a phaseout amount of $2 million. Both amounts are indexed for inflation. Combined with the ability to expense any single item under $2,500, this will allow many businesses to invest in equipment.
Bonus deprecation was extended but only until 2019. It's 50% in 2015, 2016 and 2017; 40% in 2018; and 30% in 2019. This indicates that what some might consider a gravy train is nearing the end of the line. However, the extended timeline will allow taxpayers to plan capital expansion over the next five years.
Taxpayers who are invested in employer-sponsored retirement plans can, after the date of the tax extenders' enactment, roll their retirement savings into a SIMPLE Individual Retirement Account.
If you're a fan of hard cider, alcohol limits are now able to be raised above the previous level of 7 percent up to 8.5 percent. It affects such beverages made from "apples, apple juice concentrate, pears, or pear juice concentrate, in combination with water." There's money in those apples. And there's money to be saved for a lot of people in the entire list of tax extenders. Your accountant or financial adviser should be able to help you mine the gold.
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