Tax Increase Prevention Act of 2014

With 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 bill now awaits President Obama’s signature and it is expected he will sign it into law in the very near future.  The extenders are a varied assortment of more than 50 individual and business tax deductions, tax credits, and other tax-saving laws which have been on the books for years but which technically are temporary because they have a specific end date. The new legislation generally extends the tax breaks retroactively, most of which expired at the end of 2013, for one year, through 2014. Please continue reading as the Greenwalt CPA’s Tax Services Group provides an overview of some, not all, of the extended tax breaks for 2014.

The following provisions affect individual taxpayers:

· $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;

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

· the deduction for mortgage insurance premiums as qualified residence interest;

· 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;

· the above-the-line deduction for qualified tuition and related expenses; and

· 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.

The following provisions affect Businesses:

· the research and experimentation credit;

· the increase in expensing under Section 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;

· 50% bonus depreciation

· the employer wage credit for activated military reservists;

· the work opportunity tax credit;

· 15-year straight line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements; and the exclusion of 100% of gain on certain small business stock;

The following are Energy-related extenders:

· the credit for nonbusiness energy property installed in a principal residence;

· the energy efficient commercial buildings deduction;

The Tax Services Group hopes this information is helpful. If you would like more details about these changes or any other aspect of the new law, please do not hesitate to call.