As we head into the last quarter of 2015, it's time to take a look at what is happening on the federal level that may impact the deductions and credits for you or your business.
Below is a list of some of the most significant tax provisions affecting individuals and businesses that expired on 12/31/14. It is quite possible that Congress will extend some, or all, of these through the end of 2015. However, as of the current date this has not yet been done. We may not know conclusively about the fate of these provisions until much later in the year.
Expired Extenders Affecting Individuals Include:
- Educator Expenses: Teachers were able to deduct up to $250 of out of pocket costs incurred for books, supplies, materials, and equipment used in the classroom.
- Cancellation of Debt (COD) from a Qualified Principal Residence: Individuals were able to exclude up to $2 million of COD income related to qualified principal residence indebtedness that was canceled because of financial position or a decline in value of the residence.
- Mortgage Insurance Premiums: Taxpayers with Adjusted Gross Income (AGI) less than $109,000 were able to treat qualified mortgage insurance premiums as home mortgage interest.
- Personal Energy Property Credit: A $500 credit was available for qualified energy improvements to a taxpayer’s principal residence.
State and Local Sales Taxes Deduction: Taxpayers had the option to elect to deduct state and local general sales tax instead of state and local income tax as an itemized deduction.- Tuition and Fees Deduction: Taxpayers could claim an above the line deduction for qualified tuition and related expenses used for higher education.
- Qualified Charitable Distributions (QCD): Taxpayers who were 70 ½ or older were eligible to make tax free transfers from an IRA directly to a charity. Transfers made counted towards the individual’s required minimum distribution for the year, but are not deductible as charitable contributions.
Expired Extenders Affecting Businesses Include:
- Qualified Leasehold, Restaurant and Retail Improvement Property: Provisions in effect for 2014 state that such property was assigned a 15 year, straight line, recovery period. In 2015, when these property types are placed in service they are to be assigned a 39 year, straight line, recovery period.
- Section 179 – Deduction Limit: In 2014 the 179 deduction and qualifying property limits were $500,000 and $2,000,000. Under 2015 law, the deduction and qualifying property limits are $25,000 and $200,000 respectively.
- Special (Bonus) Depreciation: For assets placed in service in 2014, taxpayers were allowed a 50% special depreciation deduction for qualified property additions. In 2015, special depreciation is only available for long production period property and certain aircraft.
- Research Credit: The research credit that was available in 2014 is no longer available for 2015.
- Work Opportunity: In 2014 employers were allowed a credit for wages paid to new employees who belonged to certain targeted groups. This provision expired at the end of 2014 and is no longer available for the 2015 tax year.
Related Video: Filing Your Taxes Doesn't Have to be a Taxing Event
In recent years, Congress has been known for waiting to make decisions regarding whether or not to extend tax provisions until very late in the year. As your can imagine, this can make tax planning difficult. As CPAs, it is our job to advise clients of the tax consequences under both scenarios. For tax planning assistance, contact me at dalger@zinnerco.com or 216-831-0733. 
