I suffer from friggatriskaidekaphobia, also known as the fear of Friday the 13th. I’ve always been a superstitious person so the date itself brings to mind visions of rotten luck following me all day. To top that off, a psychologist went so far as to name the fear and Hollywood played on that fear with an entire movie franchise – thanks for the sleepless nights!
The day also brings something else to mind that’s scary to some. Tax season is upon us and many tax provisions (or credits and deductions) that were available this year are expiring on December 31.
In the spirit of Friday the 13th, here are 13 popular tax provisions that, unless Congress acts, will be expiring at the end of the year:
- 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. For people living in an area with little to no state income tax that have bought a big ticket item, like a car, benefit from this option – but may not after 2013.
- Taxpayers thinking of adding energy-saving home improvements to their primary residence may want to have the changes made in 2013. The Energy Efficient Home Improvement Tax Credit (with a lifetime limit of $500) was set to expire in 2011 but got extended through 2013. Homeowners need to double check that the improvements qualify as energy-efficient (the manufacturer should be able to confirm that).
- Grade K- 12 teachers, counselors, principals and aides should claim the above-the-line deduction of up to $250 out-of-pocket costs for school and class room supplies before 2014.
- The Higher Education Tuition Deduction allows taxpayers to deduct between $2,000 and $4,000 of qualified tuition costs – and is set to expire at year end.
- A tax credit for highway-capable 2- or 3-wheeled electric vehicles (not low speed such as golf carts) will expire at year-end. The tax credit of $7,500 available for 4-wheeled electric vehicles will be phased out once the manufacturer has sold 200,000 vehicles.
- The cancellation of qualified principal residence indebtedness exclusion from gross income is set to expire. For those taxpayers involved in debt modification or facing foreclosure or a short sale, they can exclude up to $2 million from income cancellation of mortgage debt.
- Mortgage Insurance Premium Deduction, which allows taxpayers to treat mortgage insurance as an additional, itemized mortgage interest deduction, is scheduled to sunset this year.
- 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 expire this year.
- The credits for biodiesel fuel and the alternative fuel (including mixtures) are slated to expire on December 31, 2013.
- Business owners should take advantage of the Section 179 credits that were extended through 2013. Owners can write off up to $500,000 of qualified capital expenses (there is a phase-out to consider).
- The qualified transportation benefits give most employers the option to offer transit and vanpool tax-free benefits to employees for up to $245 per month and is scheduled to expire as well at the end of the year.
- Enacted under the Heroes Earnings Assistance and Relief Tax Act of 2008, this provision, which allows qualified small business employers to take up to 20% credit on their income taxes for wages paid to employed active duty members, will also expire at year end.
- And as one last nod to the Friday the 13th movie franchise, the election to deduct qualified film and television production costs will expire if Congress doesn’t prevent it.
The loss of these tax provisions may give you the heebie-jeebies. Luckily, your local Liberty Tax® preparer can assist in reviewing the steps that you need to take in order to capitalize on them. To find a Liberty Tax® near you, call 1-866-871-1040 or search for an office using our office locator.
Disclaimer: Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.