Tax Breaks – Coming and Going
When Congress extended dozens of tax breaks for tax year 2014 at just about the last minute of the last hour of 2014 (late in the evening on December 13), it upended tax strategies for many of our clients. Each CPA, and, all the tax accountants here at Sareen and Associates knew that there would be a lot of time spent explaining to existing clients why what we told them to do before has now changed.
That said, many of the Section 179 (IRS Deduction and Bonus Depreciation) changes will help ease the tax burden of our small business clients, not increase it, so that sort of development is always welcome. And it’s not just all about changes for businesses, either – some of the changes affect individuals filing their returns, such as the extension of tax breaks regarding commuting costs and deductions for parking. So, if you’re on the fence about whether it’s worth it to pay a professional CPA firm like ours to do your taxes this year, the answer is that the last-minute changes in the 2014 tax code make a pretty compelling argument for that course of action.
But the extensions are good only for 2014 tax year, and 2015 is still very much in play in terms of these same tax rules. So, something that seemed to make sense in 2014 would no longer makes sense in 2015? Let’s take the aforementioned tax credit for commuters as an example of a tax break that will expire in 2015 if not renewed:
All commuters may reduce their pre-tax income to account for their commuting costs. Under the 2015 law, however, those who drive to work and pay for parking are allowed to exclude more ($250 per month) than those who use mass transit ($130 per month). The 2014 extension measure again provides parity, as it did in previous years, by also allowing mass transit riders to exclude $250 per month for parking. Which, if you pay for parking at a Metro station, is very welcome news.
Doesn’t make sense anymore in 2015? Hmmmm.
And the business deductions set to expire once again could also be quite helpful to small business owners, many of whom are just treading water in certain years. Purchase-based tax credits are crucial in most years to small firms:
We can’t pretend to have any sort of inside track on what Congress will or won’t do regarding these taxes. We just don’t know what’s going to happen. But, what we can do is help our tax clients to hope for the best while preparing for the worst. Our CPAs can advise you on making smart purchases and investments in your company; the kinds that ensure your company gets the most favorable sort of tax treatment in the future, no matter which way the tax winds are blowing from Washington, DC.
And that’s what we’re going to do, just as we’ve been doing for over 20 years. Contact us if you think you could benefit from our decades of tax experience.