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Several Tax Breaks Have Expired (AGAIN) in 2013-
May be Reinstated by Congress Retroactively
Unless Congress, in early 2014, votes to extend selective tax incentives retroactively as they have done in the past, 55 tax breaks Several Tax Breaks Have Expired (AGAIN) in 2013-May be Reinstated by Congress Retroactively will no longer be available in 2014. These tax breaks for businesses, individuals and investors include a vast array of credits and deductions including research and development, clean energy wind energy production investment credits, accelerated business deduction for equipment purchases and many others.
Although these tax breaks were originally scheduled to expire years ago, for the past couple of years they have been allowed to expire only to be reinstated retroactively. It is anyone’s guess if we will see these reinstate as of today, January 1, 2014. Some of these include:
Business Research and Development Credits, a credit that was first enacted in 1981 and has helped spur business technology research these past two decades, will expire at the end of 2013 unless extended.
Wind Generated Power tax credit: Although tax credits have contributed toward the development of wind powered energy, the tax credit will expire at the end of 2013. However this does not affect the “48C” 30% investment tax credit that is available to selective businesses to develop domestic clean energy. See .
Section 179 expense deduction: For 2013, business owners can immediately deduct up to $500,000 of qualifying assets (office, equipment, machinery, etc. they need to buy to run their business). But in 2014, unless Congress acts to extend it, the limit that's immediately deductible plunges to $25,000.
Deduction for state and local sales taxes: Folks who pay little or no state income tax, but incur a large amount of state sales taxes (think about the sales tax you pay when you buy a boat, car, etc.) can choose to deduct as an itemized deduction the greater of the amount they paid in state income OR sales tax. The deduction, which was originally set to expire as part of the Bush sunset tax cuts enacted in 2001 but was originally scheduled to expire in 2011 was retroactively temporarily restored though 2013.
Tax-free IRA distributions to charity: IRA owners, age 70 ½, were allowed to distribute from their IRAs up to $100,000 tax free as long as it was sent directly to a charitable organization. Unless restored, this provision will expire in 2013.
Educators expense deduction: A tax deduction of up to $250 of out-of-pocket costs for school and classroom related supplies will expire at the end of 2013
Energy-efficient home improvement tax credits: A tax credit of $500 for the cost of “specified” energy-saving home improvements to your primary residence will expire in 2013.
Another related credit - the energy efficient home credit also expires 12/31/2013 unless restored. This is a tax credit of $2,000 per home, which is currently permitted to a contractor who builds a home to be used by the customer as a residence.
Education tax deduction: The higher education tuition deduction, which allows folks to deduct between $2,000 and $4,000 of qualified tuition costs, was retroactively restored, expiring at the end of 2013.
Exclusion from income for discharge of debt on principal residence: Folks who walk away from their home leaving the bank on the hook for the unpaid mortgage (through foreclosure, deed in lieu or short sale) are not required to report the amount of unpaid and discharged debt as taxable income in 2013. In 2014, the discharged debt will be taxable income.
A good article appeared on January 2, 2014 in the Washington Post:
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