Tax Extenders for 2014
On December 19th 2014 Congress passed and President Obama signed into law fifty tax extenders on tax laws that expired on December 31st, 2013. These tax laws were extended for one year from January 1, 2014 through December 31st 2014. These tax extenders will affect both businesses and individuals. The following are a list of the major tax extenders for 2014.
- The deduction for state and local sales taxes. The option to deduct state and local sales taxes instead of deducting state and local income taxes is is huge for those who live in no-income tax states like Florida and Texas.
- Above-the-line deduction of up to $4,000 for higher education expenses. This helps college students or their parents.
- A $250 above-the-line deduction for school teachers for supplies.
- The ability to exclude up to $2 million in discharge of residential mortgage indebtedness from gross income. Normally taxpayers have to pay income taxes on forgiven debt.
- The deduction for mortgage insurance premiums
- Energy-efficient home improvements tax credit. This one is listed under “energy” extenders but it affects homeowner’s personal tax return. You can get a tax credit (that’s a dollar for dollar reduction in your tax liability) of up to $500 for making energy-efficient home improvement like new windows or upgraded heating/a-c equipment.
- Tax-free distributions from an Individual Retirement Account for charitable purposes (the IRA charitable tax rollover) for taxpayers over 70 ½.
- The bonus depreciation and Section 179 deduction was reinstated. The bonus depreciation deduction is a 50% depreciation deduction on all new equipment
acquired in 2014. The Section 179 deduction increased the deductibility of equipment acquired in 2014 from $25,000 to $500,000.
- Parity for employer-provided mass transit and parking benefits ($250 a month, up from $130 a month). Transit commuters who run all their commuting costs through their employer’s transit plan should get a retroactive true up—a potential $576 extra tax savings for 2014.
- Enhancements to the rules for donating real property for conservation that encourage farmers, ranchers and other modest-income landowners to increase the pace of land conservation.