Articles

2014 Tax Credits and Deductions (Extended for 2014 Tax Returns)

Calculator/pen image

In December 2014, Congress passed the Tax Increase Prevention Act of 2014 (H.R. 5771); however, it expired December 31, 2014. Before you file your 2014 tax return, you should talk with your tax professionals about the following credits/deductions.

10 Tax Breaks for 2014

$500 energy efficient tax credit improvements

This credit reduces your taxes (as opposed to a deduction that reduces your taxable income) as it allows you to take 10% of the cost of items such as insulated windows, insulation material, water heaters or wood pellet stoves. This is a cumulative tax. If you have taken the full $500 tax credit in the past, you cannot take it for 2014.

Deduction for certain teachers

Primary and secondary school teachers buying school supplies out-of-pocket may be able to take an above-the-line deduction of up to $250 for unreimbursed expenses.

Distributions from IRAs for charitable contributions

Taxpayers who are age 70 1/2 or older can donate up to $100,000 in distributions from their IRA to charity.

Property (conservation) donation

This tax provision allows taxpayers to donate property or easements to a local land trust or other conservation organization and receive a tax break in return.

Discharge of principal residence indebtedness

Typically, forgiven debt is considered taxable income in the eyes of the IRS; however, this tax provision, which was extended through and expired at the end of 2014, allows homeowners whose homes have been foreclosed on or subjected to short sale to exclude up to $2 million of cancelled mortgage debt. Also included are taxpayers seeking debt modification on their home.

Mortgage insurance premiums

Mortgage insurance premiums (PMI) are paid by homeowners with less than 20% equity in their homes. These premiums were deductible in tax years 2012, 2013, and again in 2014; however, this tax break ended on December 31, 2014.

Mass transit fringe benefits

This deduction allows commuters who used mass transit in 2014 to exclude from their income (up to $250 per month) transit benefits paid by their employers, such as monthly rail or subway passes.

Qualified tuition and expenses

Taxpayers with income of up to $130,000 (joint) or $65,000 (single) can claim a deduction for up to $4,000 in expenses. Taxpayers with income of more than $130,000 but less than $160,000 (joint) and more than $65,000 but less than $80,000 (single) can take a deduction up to $2,000.

Business stock

If you invested in a small business, such as a start-up C-corporation, in 2014, consider taking advantage of this tax provision on your 2014 tax return. If you hold onto this stock for five years, you can exclude 100% of the capital gains.

State and local sales taxes

Taxpayers who pay state and local sales tax can deduct the amounts paid on their federal tax returns (instead of state and local income taxes); however, they need to itemize their return.

To learn more about these 2014 tax extensions, contact us!

Cindy McSwain

Senior Vice President
Outsourcing Services

Cindy McSwain leads AGH’s outsourcing services group. Her team provides payroll, accounting, funds disbursement, controller, and other financial outsourcing services to numerous clients throughout the U.S. Prior to directing the outsourcing group, Cindy served AGH’s audit clients for 10 years, working with a wide range of middle-market, closely held and family-owned clients.

Her current clients cross many industry sectors, including manufacturing, distribution, restaurants, retailers, medical, and not-for-profit. She has participated in numerous SEC filings and public registrations and has experience in mergers and acquisitions. Cindy is a certified public accountant and a member of both the American Institute of Certified Public Accountants and the Kansas Society of Certified Public Accountants.

Copyright © Drip Marketing, Inc., www.dripmarketing.com. All Rights Reserved.