Here are ten of those expired tax provisions that might matter to - TopicsExpress



          

Here are ten of those expired tax provisions that might matter to you: Educator expense. For 2013, you’ll see this above-the-line deduction (meaning that you don’t have to itemize to take the deduction) on line 23. In 2013, the IRS offered teachers and other eligible educators a deduction of up to $250 for unreimbursed expenses paid or incurred for books, supplies, computer equipment, other equipment, and supplementary materials used in the classroom. For purposes of the deduction, eligible educators were defined as teachers, instructors, counselors, principals or aides for kindergarten through grade 12 who put in at least 900 hours during the school year in a school that provides elementary or secondary education, as determined under state law. That expense is not available for 2014 and beyond. Mortgage debt forgiveness. Congress passed the Mortgage Forgiveness Debt Relief Act in 2007. The Act offered an exception to the rule that, for federal income tax purposes, once a lender writes off any part of your debt – even a mortgage – that amount which is forgiven is reported to the IRS may be includable as income. The exception allowed an exclusion for forgiven mortgage debt for qualifying homeowners: that gave homeowners who were underwater the chance to move towards a fresh start. The exception kicked off in January 1, 2007, and has been extended three times. The most recent extension was just for one year and expired on December 31, 2013. Equalization of employer-provided commuter transit and parking benefits. Under section 132(f) of the Tax Code, certain fringe benefits provided by employers for commuting and transportation are tax-free to employees. In 2013, benefits for transit passes and commuter highway vehicles were the same as those for parking. However, the parity provision wasn’t extended in 2013 so that, for 2014, the monthly limitation for vanpools (commuter highway vehicles) and transit passes is $130 while the fringe benefit exclusion amount for qualified parking is $250. Deduction for mortgage interest premiums. In a tough market, buying a house can be difficult. If you can’t afford to put down at least 20% of the purchase price of your home, your lender may want you to pick up private mortgage insurance (PMI). You, as a homeowner, pay the premiums for PMI but the benefit of the PMI flows to the lender in the event of a default. As part of the efforts to revive the housing market, Congress passed a law allowing for a tax deduction for the cost of PMI for homes (and vacation homes) beginning in 2007. It was lumped together with interest on line 13 of Schedule A and was subject to income phaseouts. The deduction was extended after 2007 through the end of 2013 but doesn’t apply to PMI paid in 2014 and beyond. Tax deduction for state and local general sales taxes in lieu of state and local income taxes. Taxpayers who itemize their deductions on a Schedule A may claim state and local income taxes as a deduction. In states like Texas, where there’s no state income tax (or a low state income tax), that deduction is generally worthless. However, Congress enacted a temporary provision that allowed taxpayers to deduct state and local general sales taxes paid rather than state and local income taxes (the option was available to all taxpayers, not just those in no income tax states). That provision expired at the end of 2013. Tuition and fees deduction. On your 2013 tax return, you’ll see the tuition and fees deduction on line 34: it’s another of the above-the-line tax deductions which means that you don’t have to itemize your deductions to claim the expense. Under old law, the tuition and fees deduction allowed taxpayers to claim up to $4,000 in education expenses so long as you meet certain income criteria. For purposes of the tuition and fees deduction, qualified education expenses are tuition and related expenses required for enrollment or attendance at an eligible educational institution (any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education). Related expenses are defined as student-activity fees and expenses for books, supplies, and equipment if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. Tax-free distributions from individual retirement plan for charitable purposes. This popular provision allowed an Individual Retirement Arrangement (IRA) owner age 70-1/2 or older to exclude up to $100,000 per year from gross income if IRA funds were paid directly to certain public charities. Under current law, an IRA owner must pay tax on the IRA funds when withdrawn – even if donated to a qualified charity. That’s not always advantageous for a lot of reasons, most significantly that you must itemize to get the benefit of the donation but income is immediately includible. With the direct distribution exclusion, income is excluded even if taxpayer wouldn’t have been able to itemize (net result is no tax consequence). The old rules apply for 2014 and beyond. Work Opportunity Tax Credit. The Work Opportunity Tax Credit (WOTC) offered employers a tax credit for hiring certain workers – including vets. The credit could be as high as $9,600 per qualified veteran for taxable employers ($6,240 for qualified tax-exempt organizations). For profit employers claimed the WOTC as a general business credit on Form 3800 against their income tax while qualified tax-exempt organizations claimed the credit on Form 5884-C as a credit against the employer’s share of Social Security tax. The credit does not exist for employees hired in 2014 and beyond. Section 179 expense increase. With Section 179 expensing, small and mid-size business owners could immediately deduct an amount used to obtain qualifying equipment rather than hack the deduction into pieces over time according to a depreciation schedule. Until recently, business owners could deduct up to a hefty $500,000 of qualifying assets. For 2014 (and beyond), the limit plummeted to $25,000. Tax credit for residential energy efficiency improvements (including certain appliances). A number of energy-efficient home improvement tax credits took a tumble in 2013. The credit of up to $500 for the installation of qualified insulation, windows, doors and roofs as well as certain water heaters and qualified heating and air conditioning systems evaporated as of December 31, 2013.
Posted on: Mon, 08 Dec 2014 04:05:20 +0000

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