If you’re looking for things to do to get ready for the upcoming filing season or want to check your list against another, I have one for you.  Please see “Preparing for the 2016 Filing Season,”

The article was written before passage of the extenders and appropriations tax package.  Here is a list of links to that legislation you may find useful along with a list of some items for immediate consideration.

P.L. 114-113 (12/18/15) – H.R. 2029, Consolidated Appropriations Act 2016 – includes appropriations and other changes along with the Protecting Americans from Tax Hikes Act of 2015 (PATH), which is the extenders bill.

NOTE ON EXTENDERS: The bulk of the tax changes are in PATH, although a few, including a two year extension ofthe Cadillac ACA tax (§4980I) from 2018 to 2020 (and making it deductible) is in the appropriations bill H.R. 2029 (see 1 page summary of the non-PATH tax changes from the House Ways and Means Committee).

Resources on PATH (extenders):

Overview from House Ways and Means Committee (4 pages)

Section-by-Section summary from Senate Finance Committee (20 pages).

Text of PATH (233 pages)

• Joint Committee on Taxation documents:

• Technical Explanation (JCX-144-15 (12/17/15) (268 pages)

• Estimated Revenue Budget Effects (JCX-143-15; 12/16/15)

• Estimated Budget Effects (non-PATH items) (JCX-142-15; 12/16/15)

• Ways and Means Committee statement on the “cost” of tax extenders.

• 12/15/15 pressrelease from Senators Hatch and Wyden and Congressman Brady.

All key expired items were extended at least for 2015, several items were extended for longer or permanently. A few items to consider immediately include:

• Truncating SSNs on Form W-2 – Congress will now allow the IRS to permit truncated SSNs on the W-2 sent to the employee. This is effective on 12/18/15. Thus, pending regulations by the IRS, this might apply to the 2015 Forms W-2. Regulations issued in 2014 (TD 9675 (7/15/14)) allowed truncating of SSNs and EINs on almost all tax forms other than W-2 as the IRS believed that a legislation change to §6051 was needed. That change has now been made.

• Parking and Transit Parity – As in past years, the retroactive extension of the maximum monthly exclusion for transit passes ($130 prior to extension) to match the parking benefit exclusion ($250 prior to extension) will require employers to make payroll adjustments. Hopefully the IRS will again issue guidance on how to do this. The guidance for 2014 is in Notice 2015-02. Watch for updated guidance and consider that changes will likely be required for the fourth quarter Form 941 and W-2s need to reflect the updated figures.

• Residency Requirement for ABLE Accounts – The requirement to set up the plan in your state of residency is eliminated to allow individuals to set up accounts in the state “that best fits their needs, such as with regard to investment options, fees, and account limits” (per the Summary-by-Summary analysis). This is effective for tax years beginning after 12/31/14.

• Section 529 Accounts – per the Summary-by-Summary analysis, “The provision treats a refund of tuition paid with amounts distributed from a 529 account as a qualified expense if such amounts are re-contributed to a 529 account within 60 days. The provision is effective for distributions made or refunds after 2014, or in the case of refunds after 2014 and before the date of enactment, for refunds re-contributed not later than 60 days after date of enactment.”

• Retroactive EITC, Child Tax Credit and AOTC Claims – Individuals may not retroactively claim an EITC, child tax credit or American Opportunity Tax Credit on an amended return or a late-filed original return for a prior tax year where the individual did not have a valid SSN. This applies to returns and any amendment or supplement to it filed after 12/18/15.

• REITs – Numerous changes were made with varying effective dates. See the distributions made or refunds after 2014, or in the case of refunds after 2014 and before the date of enactment, for refunds re-contributed not later than 60 days after date of enactment. See Summary-by-Summary analysis and Text of PATH.

Anything to add to the list?

What do you think of the extenders package?