Every year brings changes to the already cumbersome tax code. 2014 is no different. Dozens of tax breaks are set to expire on January 1, 2014. While Congress has strong incentive to extend some of these, there is no guarantee. Some of the more popular tax breaks set to expire affects everyone from students, teacher, retirees and homeowners. Here are a few of the more widely used that are set to go away in 2014.
- Mortgage Insurance Premiums: Can deduct interest and mortgage insurance premiums for those who itemize.
- State and local sales tax: Can deduct state income tax or sales tax for those states with no income tax for those who itemize.
- Tuition and Fees: A $4000 deduction is currently available to parents and students paying for college.
- Teacher Expenses: Teachers can deduct up $250 for education expenses if they itemize.
- Donations through IRA: Those older than 70 ½ are able to make a non-taxable donation of up to $100,000 directly from their IRA. If this expires, they will have to take a taxable distribution first.
- Energy Efficient: A $500 credit is available for energy efficient home improvements.
- Commuter Cost: All commuters who use mass transit are able to take $2940 per year in tax free payments to offset the cost. The new deduction is reduced to $1560 per year.
- Mortgage Debt Forgiveness: Since 2007, homeowners were able to exclude any debt that was written off by the banks (i.e. a short sale or mortgage modification). Before this time that debt was added to taxable income. In 2014, any debt forgiveness would now be added back to taxable income.
Congress can extend these tax breaks even after the start of 2014; however until they do it has the potential to affect tens of millions of taxpayers. If you have questions on these or other tax provisions, please feel free to contact us at 410.975.5565.