Under the category, “Better Late than Never,” Congress extended many expiring tax provisions through 2014. This was done through the Tax Increase Prevention Act of 2014 signed by the president on December 19, 2014.
The law extended favorable tax provisions affecting individuals and businesses. This post will focus on the most relevant provisions affecting individuals.
Above the Line Deduction for Higher Education Expenses
Eligible individuals can deduct higher education expenses of the taxpayer, his spouse, or dependents. The maximum deduction is $4,000 for an individual whose AGI for the year doesn’t exceed $65,000 ($130,000 for joint filers).
Qualified IRA Distributions to Charity
Taxpayers who are age 70 and a half or older can make tax-free distributions to a charity directly from an IRA of up to $100,000 per year. These distributions qualify as minimum required distributions and do not count towards the charitable contribution percentage limits (e.g., cash contributions to certain charities are limited to 50% of AGI).
Exclusion of Discharged Mortgage Debt from Income
Discharge of indebtedness from qualified principal residence debt, up to $2 million, continues to be excluded from gross income.
Deduction for Mortgage Insurance Premiums
Mortgage insurance premiums in connection with acquisition debt for a qualified residence are treated as deductible mortgage interest, subject to an income phaseout of $100,000 for joint filers and $50,000 for married filing separate.
State & Local Sales Tax Deduction
Taxpayers who itemize may elect to deduct state and local sales taxes instead of deducting state income tax payments.
Above the Line Deduction for Educator Expenses
Eligible elementary and secondary school teachers may claim an above the line deduction for up to $250 per year of expenses paid for books, certain supplies, computer and other equipment, and supplementary materials used in the classroom.
If you have questions about how this applies to you, please contact us.
Buzzkill Disclaimer: This post contains general tax information that may or may not apply in your specific tax situation. Please consult a tax professional before relying on any information contained in this post.