Should we call it” holiday spirit” or “political procrastination”? Whichever you choose, the result will benefit many taxpayers.
On Dec. 19, Congress and the President reactivated more than 50 tax breaks that had expired about 50 weeks earlier on Jan. 1, 2014. That’s good news.
But the revival also is short-lived. The “Tax Increase Prevention Act of 2014” extended them only for one year, until Dec. 31, 2014. That means we taxpayers might have to hustle to capture them on 2014 returns. Of course, we’ll also be wondering again on Jan. 1, 2015, whether they’ll survive next year.
Here are some noteworthy tax provisions that are back from the brink, as selected by the National Association of Tax Professionals.
Individual taxpayers:
o State and local sales tax deduction.
o Deduction for tuition and fees for education.
o Deduction for mortgage insurance premiums.
o Tax credit for non-business energy property.
o Tax credit for energy-efficient new homes.
o Tax-free distributions from IRAs for charitable purposes
o Real estate contributions for conservation purposes.
Business taxpayers
o Employer wage credit for employees on active duty in the military.
o Expansion of Section 179 deduction to $500,000 for expenses of property, including machinery and off-the-shelf computer software. Also covers certain “qualified” real property to $250,000 within the cap.
o 50 percent bonus depreciation on new property (with specific caps for vehicles).
o Work Opportunity tax credit.
o Basis adjustment to stock of S corporations donating property to charities.
o Enhanced deduction for food donations.
o New markets tax credit.
The new Tax Increase Prevention Act (now Public Law 113-295) also created a new, tax-exempt account to assist people with disabilities, including blindness. The account is called an ABLE account after the law that enabled it, the “Achieving a Better Life Experience Act.”
We at EricJohn Ltd. are ready to guide clients through the extensions and other intricacies of tax reporting.