The “Tax Increase Prevention Act of 2014,” recently enacted by Congress, once again extends a variety of expired or expiring individual, business and energy provisions popularly known as “extenders.” The extenders include more than fifty tax deductions, credits and other tax savings laws that have been in place for several years, but have remained technically temporary because all have a specific end date. Congress has repeatedly extended these tax breaks for a year or two at a time, which is why we call them “extenders.”
The newest law generally extends these tax breaks retroactively, most of which expired in 2013, for one year through 2014. Here is an overview of the key tax breaks extended. Please call us for specific guidance on how these changes may affect you or your business.
Individual extenders – these provisions were extended through 2014:
• $250 deduction for educators’ expenses
• Exclusion (up to $2 million for married/$1 million if married filing separately) of discharged principal residence indebtedness
• Increase in employer-provided mass transit benefits to match parking exclusion of $250
• Mortgage insurance premiums are deductible as qualified residence interest
• Option to deduct state and local sales tax instead of state and local income taxes
• Increased contribution limits and carry-forward period for contributions of appreciated real property for conservation purposes
• Deduction for qualified tuition and related expenses
• Ability to transfer up to $100,000 from an IRA directly to charity as a tax-free distribution for taxpayers age 70 ½ or older
Business extenders – generally extended through 2014:
• Research credit
• Temporary minimum low-income housing tax credit rate for non-federally subsidized new buildings
• New markets tax credit
• Employer wage credit for activated military reservists
• Work opportunity tax credit
• 15-year straight line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements
• 50% bonus depreciation (extended before Jan. 1, 2016 for certain longer-lived and transportation assets)
• Section 179 rules: increase in expensing (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
• Special treatment of certain dividends of regulated investment companies (RICs)
• Definition of RICs as qualified investment entities under the Foreign Investment in Real Property Tax Act
• Exclusion of 100% of gain on certain small business stock
• Basis adjustment to stock of S corporations making charitable contributions of property
• Reduction in S corporation recognition period for built-in gains tax
Again for more information on how these changes or other aspects of the new law affect you, please call us at (414)352-3200.