Phoenix CPA | Tax Extenders Passed

Taxes Income Tax

Phoenix CPA | Tax Extenders Passed

Finally! Congress waited until the last possible minute, but finally passed the long awaited tax extenders bill which President Obama finally signed on Friday. Known officially as The Tax Increase Prevention Act, this bill temporarily extends many of the tax breaks most businesses and individuals have become accustomed to having when they file their income tax returns.

These are the tax breaks extended for individual income tax filers:

  • The ability to deduct state and local sales taxes on schedule A instead of only being allowed to deduct state and local income taxes. A major bonus for tax payers in no income tax states.
  • $250 above the line deduction for expenses of elementary and secondary school teachers
  • The ability to exclude from income the discharge of indebtedness for a principal residence
  • The tax deduction for mortgage insurance premiums
  • The above the line tax deduction for qualifying tuition and fees
  • The tax exemption of distributions from individual retirement accounts for charitable purposes
  • The energy efficient home improvements tax credit

For business, here are the major tax deductions and credits that were extended:

  • Increased expensing for business assets, computer software and qualified real property
  • Accelerated depreciation for certain business property
  • The 100% exclusion from income for the sale of small business stock
  • The reduction of the recognition period for the built in gains of S-Corporations
  • The work opportunity credit

The good thing is that these will be available for the 2014 income tax year, the bad news is that there is no certainty that these will be extended again for the 2015 income tax year. We will likely be in the same boat next year, where we are waiting until the end of December before we can do any planning for the income tax returns. Which by that point, it’s most likely to late to change anything. Maybe one of these years, Congress will make a decision on these things in January so we can have a year of certainty, but I wouldn’t count on it. If you have any questions or would like to discuss the tax extenders bill further, don’t hesitate to contact us here at Dusseau & Makris, PC, you Phoenix CPA firm.