Tax Cuts in 2015?

Tax Cuts in 2015?

Tax Credits Poised to Receive Last Minute Stay of Execution
Rich Walker
December 9, 2014
COLUMN : Industry Watch | Codes & Standards

Housekeeping activities such as legislative extensions of tax credits are typically among those that get lost amid the politics until the last moment for Congress, and 2014 was no exception. Some 50 tax credits worth almost $42 billion were among those who received the nick-of-time reprieve on December 3, 2014 when the House voted 378-46 to reinstate them retroactive throughout 2014, setting the stage for a similar move in the Senate.

These tax provisions will remain expired at the end of 2014 without Senate acceptance, which was yet to be made at press time. If the bill survives the Senate and is signed by the President, businesses and individuals can claim the resurrected credits on their 2014 tax returns, retroactive to January 1, 2014. The outlook for ultimate acceptance was guardedly positive at press time, as outgoing Senate Majority Leader Harry Reid and President Obama indicated support, or at least lacked serious opposition.

Surviving Tax Credits

Many of the surviving tax credits are seen as needed to help U.S. manufacturers invest, expand and compete. Among them are the business research and development tax credit, which the National Association of Manufacturers (NAM) says “promotes private sector investment in innovation by reducing the after-tax cost of undertaking the research investment (e.g. salaries for scientists and engineers),” thus encouraging job and economic growth. Other reinvigorated provisions include bonus or accelerated depreciation such as that provided for by Section 179 of the IRS code.

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More specific to the interests of our industry is the extension of the 10 percent “25C” homeowner income tax credit of up to $200 for installation of Energy Star qualified windows and skylights, and $500 for Energy Star exterior doors. Both are subject to a $500 lifetime limit per individual taxpayer. IRS Form 5695 must be filed to obtain the credit. Under the terms of the tax credit provision, the product(s) must be placed in service (installed) during the taxable year in order to claim the credit. Additional guidance is available through the IRS website.

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