In Mid December the Senate passed, and President Obama signed, a one-year tax extender bill extending more than 50 tax provisions through Dec. 31, 2014. The long-term fate of these on-again off-again tax breaks will have to be decided in the next Congress. For many years (most of my career) annual tax legislation was passed in a timely manner and without much controversy. Recent battles in congress over taxes and spending have resulted in last minute and retroactive legislation. The result is generally a late start to tax season while the IRS responds to the changes with updated forms, instructions, and publications. These retroactive changes also make tax planning a challenge.
With over 50 provisions impacted a complete discussion of the new law isn't practical. The majority of the provisions pertain to businesses. Some of the individual highlights include:
Deduction for teachers' expenses- This measure allows educator to deduct up to $250 for the costs of classroom supplies that they buy with their own money.
State and local sales tax deduction- If you itemize your taxes, this measure lets you deduct the state and local sales taxes you've paid in lieu of state income taxes.
Tuition deduction- Taxpayers meeting certain income limits may deduct up to $4,000 in qualified tuition, fees and related expenses for post-secondary education, such as college and graduate school. The deduction may be taken for yourself, your spouse or your dependents.
Deduction for mortgage insurance premiums- This tax break allows for individuals to claim the cost of mortgage insurance premiums as an itemized deduction (subject to income limitations).
Income exclusion for mortgage debt that's been forgiven- Losing your home in foreclosure or selling your home in a short sale can frequently result in forgiveness of debt income. The IRS treats this forgiven debt income as taxable. This bill extends a provision to exclude this income under certain circumstances.
You can read more about this bill at congress.gov.
With over 50 provisions impacted a complete discussion of the new law isn't practical. The majority of the provisions pertain to businesses. Some of the individual highlights include:
Deduction for teachers' expenses- This measure allows educator to deduct up to $250 for the costs of classroom supplies that they buy with their own money.
State and local sales tax deduction- If you itemize your taxes, this measure lets you deduct the state and local sales taxes you've paid in lieu of state income taxes.
Tuition deduction- Taxpayers meeting certain income limits may deduct up to $4,000 in qualified tuition, fees and related expenses for post-secondary education, such as college and graduate school. The deduction may be taken for yourself, your spouse or your dependents.
Deduction for mortgage insurance premiums- This tax break allows for individuals to claim the cost of mortgage insurance premiums as an itemized deduction (subject to income limitations).
Income exclusion for mortgage debt that's been forgiven- Losing your home in foreclosure or selling your home in a short sale can frequently result in forgiveness of debt income. The IRS treats this forgiven debt income as taxable. This bill extends a provision to exclude this income under certain circumstances.
You can read more about this bill at congress.gov.
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