Congress passes last-minute extenders bill

Just before adjourning for 2014, Congress passed a bill retroactively extending more than 50 tax breaks, often collectively referred to as the "tax extenders." These tax breaks had already expired, but the new bill, the Tax Increase Prevention Act of 2014, extended them retroactively to January 1, 2014. The extensions granted in the bill remain in effect through December 31, 2014. For these tax breaks to survive beyond that point, they must be renewed by Congress in 2015.

Here are some highlights from the law.

•    The new law retains an optional deduction for state and local sales taxes in lieu of deducting state and local income taxes.

•    The maximum $500,000 Section 179 deduction for qualified business property is reinstated for 2014.The deduction is phased out above a $2 million threshold.

•    50% bonus depreciation for qualified business property is revived. The deduction may be claimed in conjunction with Section 179.

•    Parents may be able to claim a tuition-and-fees deduction of up to $4,000 for qualified higher education expenses. The amount of the deduction is linked to adjusted gross income.

•    An individual age 70½ or older could transfer up to $100,000 tax-free from an IRA to a charity.

•    Homeowners can exclude tax on mortgage debt cancellation or forgiveness of up to $2 million on a principal residence.

•    Taxpayers can take a credit of 10% of the cost of energy-saving improvements installed in the home, subject to a $500 lifetime limit.

•    Educators can take an above-the-line deduction of up to $250 for classroom supplies purchased with their own funds.

Please contact us if you need more details on these or other provisions that apply to you.