December 22, 2014
President Signs 2014 Tax Extenders Act
Finally! It's official! President Barack Obama signed H.R. 5771, The Tax Increase Prevention Act on Friday, December 19, 2014. The tax team at Marcum has been following the progress of the Act and can now report that the bill is signed and taxpayers can be confident in planning to close out the year.
Businesses can celebrate the one-year extension of the research and development credit and bonus depreciation. Individual taxpayers can celebrate many of the 50-plus tax extenders.
The provisions extended under this Act includes tax relief for teachers, commuters, green home renovators. Many of the provisions in the Act will result in additional deductions and benefits available for breaks on both business individual 2014 tax returns.
As a reminder, the signing of the Act, only provides for a one-year extension of the laws, which expired on December 31, 2013. The extension is only good through December 31, 2014. That means uncertainty, once again, come 2015.
The major individual tax extenders include:
- The deduction for state and local sales taxes
- Above-the-line deduction of up to $4,000 for higher education expenses
- A $250 above-the-line deduction for school teachers for supplies
- Parity for employer-provided mass transit and parking benefits ($250 a month, up from $130 a month)
- The exclusion of discharge of residential mortgage indebtedness from gross income
- The deduction for mortgage insurance premiums
- Energy-efficient home improvements tax credit
- Tax-free distributions from an Individual Retirement Account for charitable purposes
Besides the extenders listed above, one of the most long awaited Extenders includes the retroactive EPACT 2004 Section 179D provision related to Energy Efficient Business Property Renovations. For those businesses that made eligible construction changes or retrofits to lighting, LEED design or HVAC during calendar 2014 consideration should be given to review the renovations for deductibility under this extended provision.
The law also creates Achieving a Better Life Experience (ABLE) accounts set up for the benefit of persons with disabilities. The ABLE program will be similar to a Section 529 plan and used for qualified expenses. Contributions to an ABLE account would be limited to the gift tax exclusion amount.
If you have any questions related to how any of the provisions may effect you or your business, please contact your Marcum Tax Professional.