Well, it is December 30th, 2014 and as I sit down to write up the last blog post of the year, I realize how much I have enjoyed writing this year! This blog has brought a lot of traffic my way, I have gained a few clients, engaged in some very interesting conversations with fellow professionals and learnt a lot about the roller-coaster social media world! Thanks to my readers from the bottom of my heart!
The conversations around tax planning sessions these days has been how quickly can we file in the coming tax season (hopefully on time!) and of course the hype around the Tax Extenders Bill that Congress passed early this month and President Obama signed soon after. So what was the drama all about?
Individual Tax Extenders:
These are the tax breaks that were set to expire at the end of the year and have been extended through the end of 2014:
- State and Local General Sales Tax Deduction:
- Mortgage Insurance Premiums Treated As Qualified Residence Interest:
In order to do this, the insurance must be in connection with acquisition debt (mortgage) for a qualified residence, and the insurance contract must have been issued after 2006.
This deduction phases out ratably for taxpayers with adjusted gross income of $100,000 to $110,000 (half those amounts for married taxpayers filing separately).
- Exclusion From Income of Discharge of Qualified Principle Residence Indebtedness:
- Deduction for Qualified Tuition and Related Expenses:
Your maximum deduction is $4,000 if your adjusted gross income for the tax year does not exceed $65,000 ($130,000 in the case of a joint return), or $2,000 for other individuals whose adjusted gross income does not exceed $80,000 ($160,000 in the case of a joint return).
For those with incomes above the maximum threshold, no deduction is allowed.
- Tax-Free Distributions from IRA Plans to Charity:
- Certain Expenses of Elementary and Secondary School Teachers:
- Parity for Employer-Provided Mass Transit and Parking Benefits:
- Contributions of Capital Gain Real Property Made for Conservation Purposes:
If you contributed to a qualified conservation purpose, your deduction is generally limited to 50% of your adjusted gross income (AGI), minus your deduction for all other charitable contributions. TIPA extends this and also extends the enhanced 100% deduction for individual and corporate farmers and ranchers for contributions of property used in agriculture or livestock production.
There were tax breaks that were not extended, these were: (1) the health coverage tax credit for displaced workers and retirees; (2) the plug-in motorcycle tax credit; (3) the energy-efficient appliance credit; (4) New York Liberty Zone tax-exempt bond financing and; (5) partial expensing of refinery equipment.