Revenooer Rants: Congress finally acts on year-end tax measure
Special to the Bonanza
In characteristic fashion, on its way out of town for the holidays, Congress did bestow upon us plebes a few last minute extensions of a number of provisions that had otherwise expired at the beginning of 2014. Check out the “Tax Increase Prevention Act of 2014” for the details. Some of the extended provisions that may affect you include:
Above-the-line deduction for educator expenses: Elementary and secondary school teachers may claim an above-the-line deduction for up to $250 annually of expenses paid or incurred for books, certain supplies, computer and other equipment. (Don’t spend the tax savings on this one all in one place!)
Exclusion for discharged home mortgage debt: This is potentially a biggie. Discharge of indebtedness income from qualified principal residence debt of as much as $2 million is excluded from gross income. Even though the real estate market and economy have improved a bit, some folks are still upside down with respect to their mortgage debt, and could benefit greatly from this provision if their debt is discharged before January 1, 2015.
Mortgage insurance premiums remain deductible for another year: Such premiums paid in connection with acquisition debt associated with a taxpayer’s residence are treated as deductible mortgage interest. Higher income taxpayers may lose some of this deduction, which begins to “phase out” when adjusted gross income exceeds $100,000.
State and local sales taxes: This one helps Nevadans who itemize their deductions and don’t otherwise pay state income taxes. They can elect to deduct state and local general sales and use taxes paid in 2014.
Above-the-line deduction for higher education expenses: Though another of those rules which “phase out” for higher income folk, eligible individuals can deduct “qualified tuition and related expenses” of the taxpayer, his spouse or dependents. The maximum deduction is $4,000 if AGI doesn’t exceed $130,000 on a joint return.
Exclusion of 100 percent of gain on certain small business stock: Under pre-Act law, the exclusion was to be limited to 50 percent of gain for stock acquired after Dec. 31, 2013, and 7 percent of the excluded gain was to be an alternative minimum tax preference. The Act extends the 100 percent exclusion and rescinds the AMT implication for a year.
CONSULT YOUR TAX ADVISER – This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation. Jeff Quinn is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd. He welcomes comments at firstname.lastname@example.org.