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Special Edition Tax Tip Tuesday

We have an important tax law update for you. In this special edition of Tax Tip Tuesday, we will address the tax package that the Senate passed last night. The president is expected to sign this legislation.

In the recently enacted “Tax Increase Prevention Act of 2014” Congress has once again extended a package of expired or expiring individual, business, and energy provisions known as “extenders.”

The extenders are a varied assortment of more than 50 individual and business tax deductions, tax credits, and other tax-saving laws that have been on the books for years, but are technically temporary because they have a specific end date.

Congress has repeatedly extended the tax breaks for short periods of time, which is why they are referred to as “extenders.” The new legislation generally extends the tax breaks retroactively for one year through 2014. Most of these expired at the end of 2013.

Business Credits and Special Rules Extended through 2014

  1. 50% bonus depreciation

  2. The increase in expensing, also known as Sec. 179 (up to $500,000 write-off of capital expenditures subject to a gradual reduction once capital expenditures exceed $2,000,000) and an expanded definition of property eligible for expensing

  3. 15-year straight line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements

  4. The research credit

  5. The employer wage credit for activated military reservists

  6. The work opportunity tax credit

  7. The election to accelerate alternative minimum tax (AMT) credits in lieu of additional first-year depreciation

Individual Taxpayers Provisions Extended through 2014

  1. 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

  2. The exclusion of up to $2 million ($1 million if married filing separately) of discharged principal residence indebtedness from gross income

  3. Parity for the exclusions for employer-provided mass transit and parking benefits

  4. The deduction for mortgage insurance premiums deductible as qualified residence interest

  5. 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

  6. The increased contribution limits and carryforward period for contributions of appreciated real property (including partial interests in real property) for conservation purposes

  7. The above-the-line deduction for qualified tuition and related expenses

  8. The provision that permits tax-free distributions to charity from an individual retirement account (IRA) of up to $100,000 per taxpayer per tax year, by taxpayers age 70 and ½ or older

We will be taking a break for the holidays. The next edition of Tax Tip Tuesday will be released on January 6th, 2015.

Happy Holidays!!!

Disclaimer: The items included in the Tax Tip Tuesday Video Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation. IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advise contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein

Previous Editions of Tax Tip Tuesday
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