For Mark Roberts’ Use: After a long period of intense negotiations, the Tax Increase Prevention Act of 2014 finally passed through Congress in December. The act extended 55 tax provisions through the end of 2014. Although the future of the tax measures remains uncertain, for now we know that several of these provisions may benefit you when you file your tax return.
The two largest breaks for individuals. The two largest tax breaks provide about $3 billion in relief to tax payers. First, those who live in states without state or local income tax can now deduct state and local sales taxes in lieu of income tax deductions. Second, those whose mortgage debt was canceled or forgiven can exclude the forgiven debt from their gross income.
More help for homeowners. Homeowners have long counted upon the mortgage interest deduction to lower their tax liability. With the passage of the Tax Increase Prevention Act, they can now deduct mortgage insurance premiums as well.
Help for students or parents of students. College tuition remains a large financial burden for many American families. Now, qualified education expenses can be counted as an above-the-line deduction (prior to calculating adjusted gross income). Check with your tax professional about which college-related expenses qualify for this deduction.
Help for teachers. Educators will be able to deduct up to $250 in unreimbursed classroom expenses, such as books, supplies, or other supplementary materials on their 2014 tax returns.
A break for investors. Investors who are age 70 ½ or older can make tax-free charitable contributions directly from their IRAs in lieu of all or part of their required minimum distributions. The contributions can amount up to $100,000, providing enormous relief for older investors.
The Tax Increase Prevention Act didn’t pass until December 31, but did not extend the tax filing deadline of April 15. Since this provides a narrow window of opportunity for tax payers, consult with your tax professional immediately to be sure you’re on target to reap the maximum amount of tax savings available to you.