What is Path Act
The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) was enacted on December 18, 2015, and made a number of important changes to the tax code. First and foremost, it retroactively extended many provisions that had expired at the end of 2014, including the deduction for state and local sales taxes, the research and experimentation tax credit, and the enhanced child tax credit.
In addition, the PATH Act made permanent a number of other provisions that had previously been set to expire, such as the earned income tax credit and the American Opportunity Tax Credit. Finally, the PATH Act also included several new provisions designed to simplify the tax code and make it more efficient. For example, it created a new “renewable energy” tax credit for businesses that invest in qualifying renewable energy projects. Overall, the PATH Act made a number of significant changes to the tax code – both good and bad – that will affect taxpayers in a variety of ways.
How to use Path Act
The Protecting Americans from Tax Hikes Act is designed to help taxpayers and make filing taxes easier. The main provisions of the PATH Act are as follows:
- The PATH Act makes permanent a number of tax breaks that had previously expired. These include the deduction for state and local sales taxes, the deduction for tuition and fees, and the tax credit for research and development.
- The PATH Act also expands the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC).
- Finally, the PATH Act creates a new streamlined process for individuals who have unpaid taxes. This process includes reducing penalties for certain taxpayers and allowing payment plans for those who owe back taxes.
By taking advantage of the provisions of the PATH Act, taxpayers can save money and ensure that they are in compliance with the law.
What are the benefits of using Path Act
The federal PATH (Protecting Americans from Tax Hikes) Act of 2015 provides permanent tax relief for individuals and businesses, and simplifies the tax code by eliminating many temporary provisions that had to be renewed each year. Among its many provisions, the PATH Act:
- Makes permanent the research and development tax credit, which helps businesses invest in new products and technologies;
- Allows businesses to immediately deduct the full cost of qualified capital expenditures, such as machinery and equipment;
- Creates a new deduction for companies that provide paid leave to employees for family and medical reasons;
- Increases the amount individuals can contribute to Health Savings Accounts;
- Makes it easier for small businesses to claim the Work Opportunity Tax Credit, which helps businesses offset the cost of hiring certain groups of workers;
- Provides tax relief for educational expenses, including expanding the American Opportunity Tax Credit and making it available to a wider range of taxpayers.
How to get started with Path Act
To get started, businesses will need to fill out Form 3115 and submit it to the IRS. The form must be submitted within 60 days of making the purchase. Once the form is approved, businesses will receive a credit for up to 10% of the purchase price of the equipment. The Act is a great way for businesses to save money on their taxes and invest in new equipment. For more information, businesses can visit the IRS website or speak to their tax advisor.
FAQs
What are some of the key provisions of the Act?
Some of the key provisions of the Act include permanent extensions of several tax breaks for businesses and individuals, as well as increases to the standard deduction and child tax credit.
How will the PATH Act affect businesses?
The PATH Act includes several provisions that will affect businesses, such as permanent extensions of several tax breaks and increases to the standard deduction.
How will the it affect individual taxpayers?
The PATH Act includes several provisions that will affect individual taxpayers, such as an increase to the standard deduction and child tax credit.
How do the Act changes affect the American Opportunity Tax Credit (AOTC)?
One of the most significant changes made by the PATH Act was to make the AOTC permanently available to eligible taxpayers. The AOTC is worth up to $2,500 per student for qualified education expenses paid for each of the first four years of post-secondary education. In order to claim the AOTC, taxpayers must have an income below $80,000 if single or $160,000 if married filing jointly. In addition, the AOTC is only available for students who are pursuing a degree or other recognized educational credential.
