Tax Extenders Law Passes…Finally!
After a long wait, Congress has finally passed a law that extends many popular tax provisions into 2014. These provisions, commonly known as “extenders”, have been hanging in limbo since they expired at the end of last year. The President still needs to sign the bill, but we expect that to happen any day now.
Below is a list of those affecting the greatest number of our clients:
Individual Tax Extenders
- Deduction for out-of-pocket teacher supplies
- Exclusion from income of discharge of qualified principal residence indebtedness
- Treatment of mortgage insurance premiums as qualified residence interest
- “Above-the-line” deduction for qualified tuition and related expenses
- Tax-free distributions from individual retirement plans for charitable purposes
Business Tax Extenders
- Research credit
- Employer wage credit for employees who are active duty members of the uniformed services
- 15-year cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements
- 50% bonus depreciation
- Increased expensing limitations (Section 179) – $500,000 limit ($2 million investment limitation)
While this law will be viewed as a win for most of the taxpayers we serve, this is only a one-year patch for 2014 that offers no clarity for 2015 and beyond. Comprehensive tax reform has been discussed that could potentially make permanent many of the provisions listed here; however, it is way too early to speculate on the timing of a reform package and the scope of what that might look like.
For now, we find ourselves in the same boat in 2015 that we were in for much of 2014 – attempting to plan for our tax obligations with little certainty as to some of the major rules that could ultimately determine what that obligation will be.
If you have any questions about the new law and how it may affect you for the 2014 tax year, please feel free to give us a call before the end of the year.