Certain expiring tax provisions were extended on Dec. 19, 2014, when President Obama signed into law the Tax Increase Prevention Act of 2014.
Some interesting examples of tax law extended on the individual income tax side are as follows:
- Deduction for certain expenses of elementary and secondary school teachers, allowing K-12 teachers to deduct up to $250 of out-of-pocket expenses used to purchase school supplies for their classes.
- Exclusion from gross income of discharge of qualified principal residence indebtedness. If you have a short sale or foreclosure on your home and the bank allows you to walk away without paying the remaining mortgage debt, this discharge of debt does not become taxable income to you. This provision applies only to your personal residence.
- Deduction of state and local general sales taxes. If you itemize your deductions on Schedule A, you have the choice of deducting either the state and local income taxes you have paid or the state and local sales taxes you have paid, whichever is larger.
- Above-the-line deduction for qualified tuition and related expenses. You have a choice of whether to take an education credit or the above-the-line deduction. The above-the-line deduction is taken on page 1 of your 1040 return. It’s a reduction of your total income.
- A tax break for commuters in employer-provided mass transit plans.
These provisions of the Internal Revenue Code were set to expire in 2014. With passage of this new law, you are still able to take advantage of these provisions in 2014.
These are just a few examples of the various individual tax law provisions that were extended. A number of business income tax provisions were extended as well. Check with your tax advisor to see if you qualify for any of these extended tax benefits.
The law (P.L. 113-295) also included technical corrections to the Internal Revenue Code of 1986.