In addition to being unnecessarily complex, another frustrating aspect of tax compliance is that the rules change every year. 2014 is no exception.
Each year, Congress and the President review the tax rules slated for expiration in the upcoming year and, for the most part, enact legislation to extend those rules for the next year. These rules, commonly known as “tax extenders”, have broad taxpayer and lawmaker appeal, and their passage each year is generally routine. This year, however, the tax extenders have not been renewed, and taxpayers and their advisors are left to wonder whether they will be.
Of the dozens of tax extenders, here is a short list of prominent extenders awaiting renewal:
- Expanded business expensing (Section 179) from $25,000 to $500,000
- Bonus DepreciationTax credit for research activities
- Tax-free distributions from retirement accounts to qualifying charities
- State and local sales tax deductions
- Teacher supplies deduction
Recent word is that many of these provisions will indeed be reinstated effective at the beginning of this year; however, this legislation may not pass until after the mid-term elections in November. This delay creates real problems for taxpayers trying to budget for their ultimate tax burden for the year and for others who might rely on the tax rules to help them decide when to make significant financial investments in their businesses.
While we are hopeful for action on these items soon, it is probably best to assume for now that these provisions will not be extended. We will keep you posted as we learn more.