On Dec. 19, President Obama signed into law H.R.5771, the “Tax Increase Prevention Act of 2014”. The bill generally provides for a 1-year extension, through 2014, of over 50 expired or expiring individual, business, and energy provisions, many of which have been on the books for years but which technically are temporary because they have a specific end date.

Note these extenders generally expire on 12/31/14, so once again taxpayers are left with uncertainty regarding tax planning for 2015.

Key business tax provisions that were extended for the 2014 tax year include:

Section 179 & Bonus first-year depreciation. For businesses, purchasing and placing assets in service before year-end, as opposed to waiting until 2015, can result in significant tax savings due to two provisions that were extended for 2014. (A) Section 179 first-year depreciation expense of up to $500,000 is available for 2014; the maximum expensing amount is scheduled to drop to $25,000 in 2015. (B) 50% bonus first-year depreciation for new machinery, equipment and software is available through 2014; bonus depreciation will no longer be allowed after 2014, unless extended by Congress.

Individual tax provisions that were extended for the 2014 tax year include:

  • Mortgage Insurance Premiums as Deductible Qualified Residence Interest
  • State and Local Sales Tax Deduction
  • Above-the-Line Deduction for Higher Education Expenses
  • Nontaxable IRA Transfers to Eligible Charities
  • Above-the-Line Deduction for Educator Expenses
  • Exclusion for Discharged Home Mortgage Debt

The above is just a brief summary of the highlights of the extenders bill. Please do not hesitate to contact me if you would like more detail or if you have any questions.