The Consolidated Appropriations Act of 2016, enacted Dec. 18, 2015, extends a long list of expired tax provisions into the future. Unlike past extension legislation, Congress extended many provisions permanently. In more traditional fashion, some of the others were extended for five years, and many for two years. The Joint Committee on Taxation estimates that the total cost of the tax provisions in the bill will be $622 billion over 10 years. Without Congress extending these various provisions, millions of Americans were in danger of losing these beneficial tax breaks by 2017.
Child tax credit & American opportunity tax credit: The threshold amount for determining whether a taxpayer is eligible for the refundable (or additional) § 24 child tax credit is permanently set at $3,000 (not indexed for inflation). Of significance, the § 25A American opportunity tax credit is made permanent and modified.
Regarding both of these credits, some retroactive claims for these credits are precluded by preventing taxpayers from amending a return (or filing an original return) for any prior year in which the taxpayer or the qualifying child did not have an individual taxpayer identification number (ITIN) to claim either credit. Individuals are barred from claiming either of these credits for 10 years if they fraudulently claimed a credit and for two years if they are found to have claimed a credit with reckless or intentional disregard of the rules. The Act also imposes new requirements regarding due-diligence on tax preparers that utilize both credits on behalf of clients.
Earned income tax credit: The provisions of the § 32 earned income tax credit (EITC) are made permanent, including an increased amount for families with three or more children and an increased phaseout range for married taxpayers filing jointly.
If you have a question based upon the implication of one of the tax provisions now extended by Congress going forward in 2016, call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation, call 212-490-0704.
