Congress has again extended a package of expired or expiring individual business and energy provisions that offer an assortment of more than 50 individual and business tax deductions tax credits and other tax-saving possibilities. These “extenders” stem from the recently enacted “Tax Increase Prevention Act of 2014” and have been on the books for years but technically are temporary because they have a specific end date. Congress has repeatedly temporarily extended the tax breaks for short periods of time (e.g. one or two years) which is why they are referred to as “extenders.” The new legislation retroactively extends the tax breaks most of which expired at the end of 2013 through 2014.
The extended individual provisions include:
- The $250 above-the-line deduction for teachers and other school professionals for expenses paid or incurred for books certain supplies equipment and supplementary material used by the educator in the classroom;
- The exclusion of up to $2 million ($1 million if married filing separately) of discharged principal residence indebtedness from gross income;
- Parity for the exclusions for employer-provided mass transit and parking benefits;
- The deduction for mortgage insurance premiums deductible as qualified residence interest;
- The option to take an itemized deduction for State and local general sales taxes instead of the itemized deduction permitted for State and local income taxes;
- The increased contribution limits and carry forward period for contributions of appreciated real property (including partial interests in real property) for conservation purposes;
- The above-the-line deduction for qualified tuition and related expenses; and
- The provision that permits tax-free distributions to charity from an individual retirement account (IRA) of up to $100000 per taxpayer per tax year by taxpayers age 701„2 or older.
The extended business credits and special depreciation and expensing rules include:
- The research credit;
- The work opportunity tax credit;
- Three-year depreciation for racehorses;
- Fifteen-year straight line cost recovery for qualified leasehold improvements qualified restaurant buildings and improvements and qualified retail improvements;
- Fifty percent bonus depreciation (extended before Jan. 1 2016 for certain longer-lived and transportation assets);
- Increase in expensing (up to $500000 write-off of capital expenditures subject to a gradual reduction once capital expenditures exceed $2000000) and expanded definition of property eligible for expensing;
- The exclusion of 100% of gain on certain small business stock;
- The reduction in S corporation recognition period for built-in gains tax;
- The empowerment zone tax incentives;
The energy provisions which are extended through 2014 include:
- The credit for non-business energy property
- The credit for construction of energy efficient new homes
If you are wondering whether you are able to take advantage of these “extenders” contact Lindemeyer for a consultation and we will walk you through the steps to determine your eligibility. Lindemeyer CPA provides experienced financial guidance in a variety of tax related areas and can also assist individuals and businesses in many other bookkeeping and accounting services. We are eager to help. Get your tax year off to a great start by calling Lindemeyer.