When does a year last only two weeks? Answer: When Congress addresses “extenders,” also known as tax provisions that expire on a regular basis. The current extender renewal took place in December 2014 and lasted until year-end. However, the revived rules are retroactive to January 1, 2014.
What does that mean for you? For one thing, it means you can benefit from tax breaks such as bonus depreciation, expanded section 179 expensing, and residential and business energy improvement incentives on your 2014 federal income tax return.
The downside? The tax breaks expired again on December 31, 2014, leaving uncertainty about tax planning for 2015.
Here are details on three of the rules that are back in place for 2014 and that may affect your 2014 tax return.
- State and local sales tax deduction. If you itemize, you can choose to deduct sales taxes you paid during 2014 instead of state and local income taxes. You can claim your actual expenses or use optional IRS tables.
- Educator expenses. If you’re a teacher who spends your own money for classroom supplies, you can deduct up to $250 of your expenses as an above-the-line deduction. You may be able to deduct additional out of pocket expenses if you itemize.
- Charitable donations from your IRA. When you’re age 70½ or older, you can make a tax-free distribution of up to $100,000 from your IRA when the money is paid directly to a qualified charity.
Please give us a call for a complete list of the extended provisions that are available for 2014.