In case you didn’t hear the news, Congress extended all of the tax breaks that ended in 2013… for just one more year. While this leaves the future hazy at least it gives us a little bit of time in 2014 to make some adjustments.
Here is a run down of the extended tax breaks for 2014:
- Itemized deductions for state sales tax in lieu of income tax (great for Florida residents!)
- $250 deduction for educators’ classroom supplies (read more about that here)
- Exclusion of debt forgiveness on primary residences- this is great if you renegotiated your mortgage or had a short sale in 2014 because you won’t pay taxes on it up to $2 mil
- Direct-to-charity donations for those over 70 ½ who have required minimum distributions (RMDs) from IRAs, up to $100,000
- The research and development tax credit for business
- Depreciation- two big changes here:
- 50% bonus depreciation on fixed assets- take bonus depreciation on all assets whether or not they are new, but new to you (i.e. purchase of used equipment).
- $500,000 limit on Section 179
In addition to the extended tax breaks, tax-deferred ABLE savings accounts were created for those who became disabled before age 26. Payins of up to $14,000 per year can be made to ABLE accounts, and payouts used for housing, transportation, education, etc. will be tax-free.
Congress also reduced the IRS’s funding for 2015. This means longer wait times if you need to call the Service. It also means that audits will become less frequent. That could be good news if you were planning on an aggressive tax strategy for 2014.
If you have any questions on 2014 tax rules? Want a difference set of eyes to review prior year tax return? Please feel free to contact me to arrange a consultation.