Great news….. Last week the Senate approved the Tax Increase Prevention Act of 2014, extending over fifty individual, business and energy tax provisions for one year, retroactive to January 1, 2014. Although the extenders package is not a two-year extension as originally sought by the House—or a permanent extension—the Act does provide certainty for 2014. Among the extended provisions are the following:
State and Local Sales Tax Deduction
For taxpayers in states without an income tax, the provision enables them, if they itemized their deductions, to claim their state and local general sales taxes in lieu of itemizing state and local income taxes.
Higher Education Tuition and Fees Deduction
The deduction is allowed for taxpayers within prescribed limits of adjusted gross income.
Teachers’ Classroom Expense Deduction
The deduction is not limited to teachers but may be claimed as well by a kindergarten through grade 12 instructor, counselor, principal or aide who works at least 900 hours during a school year.
Tax-Free Distributions from IRAs for Charitable Purposes
Allows the exclusion from gross income of qualified charitable distributions for individuals age 70-1/2 and older. Eligible individuals who are contemplating a gift to a charitable organization or gifts to multiple organizations before year-end should consider using IRA dollars if appropriate to their situation.
Code Sec. 25C Credit
Taxpayers considering energy efficient improvements to their principal residence may want to act before year-end to take advantage of the credit.
Bonus depreciation
The 50-percent depreciation allowance applies to qualifying property placed in service before January 1, 2015 (or before January 1, 2016, in the case of property with a longer production period and certain noncommercial aircraft).
Code Sec. 179 Expensing
The Code Sec. 179 dollar and investment limitations have been increased to a maximum $500,000 for 2014 by the extenders package for tax years beginning in 2014. Before year-end, taxpayers should weigh the value of electing to treat the cost of qualifying property used in the active conduct of a trade or business as an expense rather than a capital expenditure.
Leasehold, Retail Restaurant Property
The 15-year recovery period for qualified leasehold and retail improvement property and qualified restaurant property is extended one year to apply to property placed in service before January 1, 2015.
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