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PATH Act provides planning opportunities with permanent extensions of many tax incentives

After years of routine temporary extensions, Congress has made permanent a number of previously temporary tax breaks for individuals and businesses as well as extending others. The Protecting Americans from Tax Hikes Act of 2015 (PATH Act), signed into law by President Obama in December, opens the door to new planning opportunities.

Permanent extensions for individuals

Incentives for individuals extended permanently, and in some cases modified, by the PATH Act include:

Permanent extensions for businesses

The PATH Act makes permanent, and in some cases modifies, many popular tax incentives for businesses, including:

More incentives extended

The PATH Act did not leave out the rest of the traditional extenders. However, lawmakers did not make these remaining tax breaks permanent. Extended for several years (in some cases through 2019, in other cases through 2016) are:

IRS gets budget boost to improve customer service and cybersecurity, curb identity theft

Going into the 2016 filing season, the IRS has additional monetary resources to improve customer service and cybersecurity along with curbing identity theft. The fiscal year (FY) 2016 omnibus spending bill approved by Congress and signed into law by President Obama in December, allocates $290 million above FY 2015 funding to the IRS with instructions of where to spend the funds: customer service, tax-related identity theft and refund fraud, and cybersecurity.

Customer service

Identity theft

Cybersecurity

FAQ – What are the 2016 optional standard mileage rates for automobile use?

The IRS has issued the 2016 optional standard mileage rates for calculating the deductible costs of operating an automobile for business, charitable, medical, and moving purposes (Notice 2016-1; IR-2015-137). The decline in gas prices appeared to spur the drop in the optional rates.

The optional standard mileage rate for business will drop from 57.5 cents a mile (for 2015) to 54 cents a mile for 2016, a decrease of 3.5 cents, and the lowest rate in five years. The optional standard mileage rates for medical and moving expenses drops from 23 cents for 2015 to 19 cents per mile for 2016, a decrease of four cents and, again, the lowest rate in five years. The optional standard mileage rate for charitable expenses, which is set by statute, remains at 14 cents per mile for 2016.

Rules for use

Depreciation

How Do I? Elect to be taxed as an S corporation?

An S election is made by a small business corporation with the consent of its shareholders. Both the corporation and its shareholders must precisely follow the S election requirements or the election will not be valid.

Qualified Corporation

A corporation qualifies as a small business corporation for S corporation purposes if the following requirements are met, regardless of the corporation’s size or earnings:

Form 2553

To make an S election, a qualified small business corporation files Form 2553, Election by a Small Business Corporation.

Shareholder Consent

All shareholders of the corporation must indicate their consent to the S election.

Deadlines

The election has to be made on or before the 15 th day of the third month of the corporation’s tax year in order for the S election to be effective beginning with that year.

January 2016 tax compliance calendar

As an individual or business, it is your responsibility to be aware of and to meet your tax filing/reporting deadlines. This calendar summarizes important tax reporting and filing data for individuals, businesses and other taxpayers for the month of January 2016.

January 6
Employers. Semi-weekly depositors must deposit employment taxes for payroll date January 1

January 8
Employers. Semi-weekly depositors must deposit employment taxes for payroll January 2 – 5

January 11
Employees who work for tips. Employees who received $20 or more in tips during December must report them to their employer using Form 4070.

January 13
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates January 6–8.

January 15
Individuals. Individuals that did not pay their income tax for the year through withholding (or did not pay in enough tax through withholding) may make a final payment of estimated tax for 2015, using Form 1040-ES, Estimated Tax for Individuals.
Employers. Semi-weekly depositors must deposit employment taxes for payroll date January 9-12.

January 19
Filing Season. The 2016 filing season officially begins.

January 21
Employers. Semi-weekly depositors must deposit employment taxes for payroll date January 13–15.

January 22
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates January 16-19.

January 27
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates January 20–22

January 29
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates January 23–26.

February 1
Information reporting. All employers must provide their employees with their copies of Form W-2 for 2015. Businesses must give annual information statements to recipients of certain payments made during 2015. Use the appropriate version of Form 1099 or other information return.

Payers of gambling winnings. Payers of reportable gambling winnings or withheld income tax from gambling winnings for 2015 must provide the winners with their copies of Form W-2G.

Nonpayroll items. Those who withheld income tax withheld for 2015 on all nonpayroll items, including backup withholding and withholding on pensions, annuities, IRAs, and gambling winnings.

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