On December 16, the U.S. Senate approved the Tax Increase Prevention Act of 2014 which extended 54 expired tax provisions for individuals and businesses through December 31, 2014. President Obama is expected to sign the bill into law in the next several days. This legislation has preserved significant deductions/credits and created important opportunities for taxpayers for the 2014 income tax year.  

For individuals some of the extended tax provisions include: 

• Above-the-Line Higher Education Deduction: This allows taxpayers to deduct up to $4,000 for qualifying tuition expenses paid for the taxpayer, spouse or dependents. Qualifying expenses include tuition and mandatory enrollment fees above the high school level. Expenses that do not qualify include room and board fees, course related books and supplies (unless these are required to be bought directly from the school and not a 3rd party), and any supplies or equipment for sports and/or hobbies. 
• Above-the-Line Classroom Expense Deduction: The educator expense deduction of $250 has been extended for any eligible educator (kindergarten through grade 12) for unreimbursed education expenses. 
• Charitable Giving from Retirement Accounts: IRA owners age 70-1/2 or older can exclude up to $100,000 per year from their reportable income if the funds are paid directly from their IRA accounts to public charities.  
• Short-Sale Mortgage Income Exclusion: This income exclusion allows taxpayers to exclude income from the discharge of debt on their principal residence, up to $2 million.

For businesses some of the extended tax provisions are as follows:

• 50% Bonus Depreciation & Section 179 Deduction: The legislation extends 50% bonus depreciation through 2014. The Section 179 deduction is also extended through 2014 with an allowance of up to $500,000 for up to $2 million in new asset purchases.  
• Work Opportunity Tax Credit: Companies can again apply for tax credits if they hire military veterans and active reservists. A credit is also available to small businesses that hire long-unemployed or service-disabled veterans. Other hiring-related provisions that were restored this year include credits for companies that hire qualified ex-felons, qualified summer youth employees, and individuals who receive supplemental security income or long-term family assistance. 

If you have any questions about the Tax Increase Prevention Act of 2014, please contact our office. Although the end of the year is rapidly approaching, we can still schedule an appointment to discuss how the provisions of this recent legislation may assist in maximizing your 2014 tax savings.

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