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7 Expired Tax Breaks That Were Given A Longer Life

In the waning days of last year, Congress passed the Tax Increase Protection Act of 2014 (TIPA), extending a package of tax breaks that officially expired after 2013.  This new federal tax legislation, promptly signed into law, applies retroactively to January 1, 2014.  But the tax reprieve was fleeting: All of the extended tax provisions expired again on December 31, and now Congress will have to decide whether to extend them for 2015 and beyond.

Nevertheless, you still can maximize the tax benefits of TIPA on your 2014 tax return.  Consider these seven prominent tax breaks that were included:

1.  Tuition-and-fees deduction.  This is available to taxpayers who spent money on college tuition and fees in 2014, and you or your children may be able to claim it even if you don't itemize deductions. However, it is phased out at higher income levels based on modified adjusted gross income (MAGI) for the year.  The deduction is either $4,000, $2,000, or zero.  Note that you can't take this deduction if you claim either of two federal tax credits for higher education.

2.  State sales tax.  Instead of deducting state and local income taxes on your federal return, you can elect to write off state sales tax that you paid in 2014.  This tax return option is especially valuable to residents of one of the seven states which have no income tax, and it also can help those whose states have relatively low income tax rates.  You can deduct the amount of sales tax you actually paid or you can use an IRS calculator that factors in where you live and your income level.  If you use the table you also can add in what you paid on big-ticket items such as cars and boats.

3.  IRA transfers to charity.  If you are age 70½ or over, you won't be taxed on amounts you transfer directly from an IRA to a qualified charity.  Money you withdraw from an IRA for other purposes will be taxed as income; in this case, not being taxed on the distribution takes the place of the charitable deduction you'd get if you made a contribution from outside the IRA.  In addition, any amount you transfer to a charity - up to a limit of $100,000, or $200,000 for a married couple - may count as part or all of the annual required minimum distribution (RMD) you must take from your IRAs beginning at age 70½.

4.  Qualified small business stock.  Investors in "qualified small business stock" (QSBS) may exclude tax on 100% of the gain from selling such stock that was acquired before January 1, 2015.  Prior to TIPA, the tax exclusion was scheduled to be reduced to 50% of the gain for QSBS acquired in 2014.  Barring further legislation, the exclusion will revert to the 50% limit for QSBS acquired in 2015.  This tax break often is viewed as a way to attract investors to fledgling companies.

5.  Mortgage tax breaks.  TIPA extends a couple of tax benefits relating to home mortgages.  Under one provision, you can exclude the income tax you'd otherwise have to pay on up to $2 million in mortgage debt cancellation or forgiveness.  The second provision allows you to deduct mortgage insurance as interest subject to a phase-out between $100,000 and $110,000 of adjusted gross income (AGI).

6.  Conservation deductions.  Generally, the deductible amount of charitable contributions of property is limited to 30% of AGI on your tax return.  However, you may claim a deduction for the value of up to 50% of AGI for real estate property that you donate for conservation purposes.  Even better, farmers and ranchers can write off the value of land given for conservation of as much as 100% of AGI.  Also, any excess deduction under this rule can be carried forward for 15 years instead of the usual five years.

7.  Residential energy credits.  A homeowner may claim a credit of 10% of the cost of energy-saving improvements made in 2014, subject to certain limitations.  The maximum lifetime credit is $500.  The residential energy credit, which covers everything from high-tech heating and cooling systems to insulation, has been extended multiple times in the past, but its future remains uncertain.  In addition, the new law extends various other energy-related provisions.

Finally, in legislation that was attached to TIPA, Congress approved the Achieving a Better Life Experience (ABLE) Act.  The ABLE Act authorizes states to establish tax-free accounts for disabled individuals to help pay qualified expenses - for housing, transportation, education, and medical expenses, among other costs - much as Section 529 plans are used for college payments.  The new law also permits a participant in a Section 529 account to change investment direction twice a year instead of only once.



INDEX
  • How To Spell Estate Tax Relief
  • One Last Shot At A Tax Exemption
  • 5 Ways That Can Help You Pay For Higher Education
  • Seven Smart Money Moves You Should Make In 2017
  • Sticking With The Fundamentals
  • 17 Midyear Tax Moves You Still Can Make In '17
  • A Quick Overview Of Preferred Securities
  • Weigh Five 401(k) Options When Leaving A Job
  • Locate A Tax Shelter Near A School
  • How To Improve Chances For College Financial Aid
  • What Would You Do For A Bigger Salary Or More Benefits?
  • 7 Late Moves To Cut Taxes This Year
  • Seven Good Reasons To Create And Fund A Trust
  • A Good Time To Remember How Long-Term Investors Must Think
  • Remember The Lesson Of Rebalancing
  • Section 529 Plans Keep Getting Better And Better
  • Three Ways You Can Play Good Stock Market Defense
  • When Can You Reconvert To A Roth?
  • 8 Compelling Tax Reasons For Roth IRA Conversion
  • Steer Clear Of These 7 Traps For IRA Owners
  • Make Sure That You Comply With All The RMD Rules
  • How A Financial Advisor Can Help
  • Rising Housing Prices May Be Sign That New Bubble Is Forming
  • After Five Great Years For Stocks, What's Next?
  • What Are Latest Trends In Prenups?
  • The Three Biggest Financial Mistakes That You Can Make
  • 4 Of The Main Reasons To Keep Your Bypass Trust
  • Seven Steps After A Spouse's Sudden Death
  • 7 Expired Tax Breaks That Were Given A Longer Life
  • Will Record Profit Margins Upend The Bull Market?
  • 14 Top Year-End Tax Moves For Individuals In 2014
  • Be An Elephant And Downplay Talk Of Bulls And Bears
  • Five Financial Vows For Newlyweds
  • Will Record Profit Margins Cause Stock Prices To Plunge?
  • Ins And Outs Of Nondeductible IRAs
  • Identifying Investment Risk And Coping With It
  • How Best To Leave IRAs To Your Grandchildren
  • 4 Tips For Assembling A College Savings Plan
  • Don't Be Shocked If Your Tax Deductions Are Slashed
  • 2013 Was A Poor Year For Diversification
  • Risk Rose Slightly In January, But Has Decreased In February
  • Expenses And Behavior Are Key To Investment Success
  • Five-Year Returns Show Why Diversification Is Key
  • Where Can You Invest For Safety?
  • Perspective On Stock Market Trends
  • Find Extra Benefits In DI Insurance
  • Crash Course On Paying For College
  • A Realistic Look At A Hot Topic: Dividend Stocks
  • Don't Ignore These Tips About TIPS
  • Investors Flee Stocks At Precisely The Wrong Time
  • Take A Closer Look At Your RMDs
  • 10 Reasons For The IRS To Flag Your Return
  • Economic Growth Set To Slow Down Around The Globe
  • Where Will You Live After You Retire?
  • Muni Bonds May Show Gains As Tax Increases Approach
  • Two Investment Principles In Tandem
  • Is It Finally Time To Refinance?
  • Do You Understand Investments?
  • The Best Way To Gauge If The Market Is Overvalued
  • Should You Take Social Security Early Or Late?
  • Identity Theft In The New Year
  • Preserving Assets For Generations To Come
  • Managed Futures Mutual Fund Update
  • Give Away Gifts With No Gift Tax
  • Saving For Retirement
  • 21 Shocking But True Statistics About Retirement
  • Why You Shouldn't Do Your Own Estate Planning
  • Take The Time To Give Lifetime Gifts
  • What Does The Downgrade Of U.S. Debt Really Mean?
  • Should You Give Gift Cards? They May Not Be Used
  • What Do You Want Your Legacy To Be?
  • Breaking Up Doesn't Have To Be Hard
  • Do You Have An Administrative Trustee?
  • Will The New Financial Reform Law Benefit You?
  • Roth Conversion Can Hurt College Aid
  • Do Second-To-Die Policies Merit A Second Chance?
  • It's NOT The Economy, Stupid!
  • Biggest Estate Tax Problem? Income Tax
  • The Ins And Outs Of Lifetime Gifting
  • What To Do If Your College Savings Plan Is Battered
  • Identifying And Fixing The Global Economy's Woes
  • Uncle Sam Changes Financial Aid Rules
  • Retirees Eligible For Many Tax Cuts In Recovery Act
  • Funding College Savings Plans For A Grandchild
  • An Update On College Savings Plans
  • Five Smart IRA Ideas For Pre-Retirees
  • Does Your 529 College Savings Plan Match Up?
  • A Reverse Mortgage For Mom And Dad
  • Tax Pros And Cons Of Municipal Bonds
  • How The Bankruptcy Law Affects Wealthy Individuals
  • Limits of Family Limited Partnerships
  • They Don't Call 'Em Trusts For Nothing
  • The Roth 401(k) - Is It Right For You?
  • Planning Ahead A Couple Of Generations
  • Use FLPs To Transfer Assets And Cut Estate Taxes
  • What You Need To Know About The AMT In 2008
  • Coping With Estate Tax Uncertainties
  • Thinking of Remarrying? Think Prenup
  • Many Americans Fail To Take Care Of Financial Basics
  • Beware Of Social Security Identity Theft
  • Regulatory Guidelines Update
  • Energy Systems Scale and Timeline
  • Free Credit Reports Available Online
  • Don't Forget About Roth 401(k)
  • The Oil Patch Profit Squeeze
  • Understanding the Importance of a Fiduciary Standard
  • Timber As A Liquid Investment
  • Emerging Market Food Consumption Growth Equals Rising Prices
  • Ethanol: Salvation or Panacea?
  • Timber Facts
  • Bank Loan Funds - A Primer
  • The Dangers of Medical Identity Fraud
  • A Primer On Managed Futures
  • REITS: A Very Good Portfolio Diversifier, But Should You Invest In Them?
  • Does Investing Internationally Still Diversify Your Portfolio?
  • Another Way To View The Current Valuation Of REIT Sector
  • Understanding Risk-Preparing For The Unseen
  • Why Not Alternative Fixed Income Investments?
  • How Dangerous Is A Dollar Crash?
  • What Is Shorting Expense?
  • How Volatile Can The Stock Market Be?
  • GMO 7-Year Asset Class Return Forecast Is Bleak
  • Too Many ''Phish'' In The Sea
  • The Case For Industrial Metals
  • Ways To Improve The Score
  • Know The Score
  • Total Credit Market Debt (All Sectors) As % Of U.S. GDP
  • To Reinvest Or Not To Reinvest
  • Just How Expensive Is The Market?
  • Beware of Brokerage Firms' Misconduct
  • Identity Theft : Correct Those Credit Reporting Errors
  • Risk-Controlled Investing
  • What Do Rising Interest Rates Mean For Money Market Yields?
  • Q & A With Robert Arnott
  • Identity Theft : Applying For Credit? Better Check Your Credit Report First
  • Identity Theft: Everyday Prevention
  • Identity Theft: Help Is On Its Way
  • Identity Theft: Tips to Protect Yourself
  • Identity Theft: A Note About Social Security Numbers
  • Identity Theft: What Documents Should You Shred Or Store?
  • Identity Theft : Don't Fall For That E-Mail!
  • Identity Theft : One More Reason To Protect Your Credit
  • Section 529 Plans Are Popular But Not The Only Way To Go
  • Exit Gracefully: How Business Owners Should Plan For A Comfortable Retirement
  • The Importance Of Commodities In A Portfolio
  • A Tale Of Two Hedges
  • What Is Risk?
  • How To Find A Great Financial Advisor?
  • Is It Time To Find A New Financial Advisor?
  • 4 Steps To A More Secure Investment Portfolio For Your Retirement
  • Traditional Investing May Decrease Your Retirement Lifestyle
  • Year-End Tax Planning Can Help Generate High Return On Investment
  • Is Your 401(k) Plan A Failure?
  • Understanding Deflation
  • Tax Issues To Consider When Buying A Long-Term-Care Policy
  • Evaluating The Quality Of A Company's Earnings
  • Investing In Times Of Uncertainty And Risk: The Importance Of Diversification
  • 2001 Tax Relief Act Changes Education Planning
  • Yesterday's Great Companies
  • A Retirement Plan Primer After The 2001 Tax Act
  • Beware Of Common Home Repair Scams
  • Custodial Accounts: One Way To Make Gifts To Children
  • Estate Taxes To Be Reduced Then Repealed In 2010
  • Faulty IRA Conversions Can Lead To Tax Penalties
  • Many Individuals Pay Private Mortgage Insurance Beyond When It Is Necessary
  • Rethinking Estate Planning
  • Retirement Plan Contribution Limit Changes
  • Shopping For A Bank Account That Pays The Highest Possible Rate Of Interest
  • Early Retirement Incentives For Tenured Faculty Waives Fica Tax Payment
  • Do It Yourself Tax Preparers Watch Out: Tax Answers From IRS Centers Oftentimes Are Incorrect And/Or Insufficient
  • Your Medical File Report May Need A Check-Up
  • Five Tips For Preventing Thefts From Your Checking Account
  • Home Office Deductions: Hoops To Jump Through
  • Income Tax Effect On Single And Married Taxpayers
  • Income Tax Planning For Investments
  • Property Tax Challenges Should Not Be Overlooked
  • The IRS Will Follow Your Wealth To The Ends Of The Earth
  • When Do You Need Life Insurance
  • REITs: A Great Diversification Investment
  • Bank Loan Funds: A Great Fixed Income Investment As Interest Rates Rise
  • Estate Tax Will Be Reduced Gradually, Then Repealed in 2010



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