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Obama act extends tax provisions
February 19, 2016 Jerry Purvis   

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Taxpayers who discovered that some of their deductions had disappeared at the end of 2014 might be able to take advantage of them again.

Last December, President Obama signed the Protecting America from Tax Hikes Act of 2015. Called the PATH Act, it extended many of the tax law provisions that had expired the previous year.

“Basically what the feds did was take most of the tax provisions that had expired in 2014 and re-enacted them for 2015 and made some adjustments in some of them,” said Robin Christensen, Enrolled Agent with Next Generation Tax and Accounting in Gering. One of the big changes is that Section 179 expensing has been made permanent.”

With the changes, Section 179 was made permanent at the $500,000 level for 2015. Businesses exceeding a total of $2 million of purchases in qualifying equipment have the Section 179 deduction phase-out dollar-for-dollar and completely eliminated above $2.5 million. Additionally, the Section 179 cap will be indexed to inflation in $10,000 increments in future years.

Also, a 50 percent bonus depreciation has been extended through 2019. Businesses of all sizes will be able to depreciate 50 percent of the cost of equipment acquired and put in service during 2015, 2016 and 2017. The bonus depreciation will phase down to 40 percent in 2018 and 30 percent in 2019.

“Accelerated depreciation for writing off capital assets expired in 2014,” Christensen. The new law reinstates that on a permanent basis. “People again have the ability to expense assets in a single year if they have the income, rather than having to depreciate it over its lifetime.”

Under the PATH Act, there’s a $250 teacher deduction on the front page of the tax return, which has been indexed for inflation. There’s also been an increase in the Earned Income Tax Credit, and state and local tax deductions can also be deducted at the federal level.

As always, taxpayers are encouraged to seek professional assistance to determine what deductions are allowed in their particular situation.

Nebraska makes changes to tax code

When filing their state tax returns for 2015, Nebraska taxpayers will find a few changes that might work to their advantage.

The state now allows a 40 percent deduction on state returns for Social Security income included in federal adjusted gross income (AGI). However, that deduction is restricted to families making $58,000 or less a year, or $43,000 or less for other filers.

The state also added a new program that would allow for a one-time exclusion of a portion of income received as military retirement benefits. The election must be made within two years of retirement.

Text of the bill states that “individuals may make a one-time election to exclude 40 percent of military retirement income that is included in federal AGI for seven years beginning in the year of the election, or 15 percent of military retirement income that is included in federal AGI for all years beginning with the year after the retiree turns 67.”

Both state and federal tax returns will be affected by the ABLE Act, federal legislation called Achieving a Better Life Experience. It allows individuals to set up ABLE accounts for qualified expenses of disabled individuals. The legislation was implemented so people could put money aside for care of disabled individuals without having to worry about problems with AGI.
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