President Obama has signed into law the Protecting Americans from Tax Hikes (PATH) Act of 2015, ending the annual end-of-year uncertainty surrounding several tax breaks that were approved on a temporary basis.
There are two components of the act that we find most beneficial.
Qualified Charitable Distributions (QCDs) made permanent
QCDs allow people over 70½ subject to required distributions from their IRA to redirect up to $100,000 of their Required Minimum Distribution (RMD) to charity. This is a huge benefit, as any amount contributed to a public charity is now excluded from calculations impacting overall tax rates, taxation of Social Security, income tax phase-outs and Medicare premiums. This provision has been renewed annually since 2006, but PATH now removes any doubt for people interested in taking advantage of this opportunity.
529 College Savings Plans expanded
Previously excluded from the qualified expense definition, Congress has finally realized that computers are a requirement for virtually every college student. Now, computers and all peripheral equipment (i.e., printers, monitors, software) and Internet access are all expenses that can be paid by the plan.
The impact of PATH is far-reaching. Other provisions make permanent mass-transit benefits and educator expense tax deductions.