Tax Law Changes
Tax Provisions Set to Expire in 2014
Unless extended by Congress, the tax stipulations listed below were due to expire on December 31, 2014. Some of these tax breaks have been extended in previous years, so it’s feasible to think Congress might extend them again. But when Congress chooses to act on these tax issues is the unknown.
- Individuals can elect to deduct (as long as they itemize) state and local sales tax instead of state and local income taxes, whichever is the greater amount. People living in a state with little or no state income tax can benefit from this deduction. Taxpayers who have purchased a big ticket item, like a car, can also benefit from this option – but may not after 2014.
- Taxpayers who added energy-saving home improvements to their primary residence in 2014 may be the last to benefit from this tax credit. The Nonbusiness Energy Property Tax Credit (with a lifetime limit of $500) was set to expire in 2013 but got extended through 2014. Homeowners need to double check that the improvements qualify as energy-efficient (the manufacturer should be able to confirm this).
- Grade K- 12 teachers, instructors, counselors, principals and aides who qualify can get an above-the-line deduction of up to $250 out-of-pocket costs for school and classroom supplies.
- The Tuition and Fees Deduction allowed taxpayers to deduct up to $4,000 of qualified tuition costs – and expired at year end. The American Opportunity and Lifetime Learning credits remain in effect.
- Mortgage Insurance Premium Deduction, which allows taxpayers to treat qualified mortgage insurance premiums as an additional, itemized mortgage interest deduction, was scheduled to sunset at the end of 2014.
- Taxpayers older than age 70½ are required to take minimum distributions from their individual retirement accounts, so the IRA distribution to charity allows them to contribute that money without counting those distributions as income. Charitable contributions of these IRA distributions expired at the end of 2014.
Here is a short list of more tax provisions that were scheduled to expire at the end of 2014:
- Transportation benefits being equal for tax-free transit passes and qualified parking
- Alternative fuel credit
- Employer wage credit for employees who are active duty members
- Indian employment credit
- Indian reservation property accelerated depreciation recovery periods
- 50% bonus depreciation
- Leasehold improvements, restaurant buildings and improvements, and retail improvements eligible for Section 170 deduction
- Gains on section 1202 small business stock exclusion increased to 100%
- Computer Software eligible under Section 179
- S corporation’s recognition period for built-in gains tax reduced from 10 years to 5
- Increased section 179 expensing limits: $500,000 limit with a $2,000,000 phase-out
Consult a tax professional on the expiring tax regulations, as some may be extended and may even be claimed retroactively once Congress rules on this legislation. Call 1-866-871-1040 or use the office locator to find your nearest Liberty Tax office.
Individual Shared Responsibility Payment for 2015
The shared responsibility penalty for 2015 is 2% of the taxpayer’s 2015 household income or $325 per person, whichever is higher.
If the taxpayer has children under age 18, the penalty is $162.50 per child – up to $975 total per family (4).
Liberty Tax wants to stress to taxpayers to learn the tax laws and seek professional assistance if they are uncertain or unclear about any tax issue. Learn more about how Obamacare will impact you by visiting our Affordable Care Act website. Refer to our Tax Glossary for a complete list of definitions and explanations of commonly used tax terms.