After the Filing Deadline: Important Tax Changes for 2014 (Part I)

The April 15 filing deadline has come and gone. Hopefully, you were able to optimize your tax savings in 2013 and thus minimize your tax liability. If you are uncertain about your taxes for 2013, it is not too late to revise your return; speak to a tax professional if you think there may be opportunities for improvement. If, however, you are satisfied with your 2013 taxes, it is time to plan for next year.  Get Refund

Every New Year brings a number of changes in the tax law that will affect various groups of filers. This means that tax strategies, which were effective in past years, may be obsolete while new laws may have opened the door to new ways to reduce your tax liability.

Expired 2013 Tax Breaks

There are a number of tax breaks that were available through 2013 that are now expired. It is possible that some of these will be re-instated. However, with 2014 being an election year, the environment in Washington is becoming increasingly politicized, making it less likely that the two parties will come together on any extension agreements.

Here are some of the tax breaks that are no longer available in 2014:

  • Qualified tuition and related expense deductions for self, spouse, or child of up to $4000 were eliminated. The Lifetime Learning and American Opportunity credits are still available.
  • Several energy efficient home improvement credits were eliminated. However, credits for solar and wind power-related home improvements are still available until at least 2016.
  • The state and local sales and use tax deduction was eliminated. This provision allowed taxpayers to deduct either state income tax or sales and use tax on their federal return, a provision that was particularly beneficial to taxpayers in states such as Texas and Nevada where there is no state income tax.
  • The Mortgage Forgiveness Debt Relief Act expired. This act allowed homeowners an exemption from tax liability on forgiven debt from a refinanced mortgage, short sale, or home foreclosure.
  • Seniors can no longer contribute directly from their IRAs to charity without having to report the contributions as income.
  • Schoolteachers are no longer able to deduct up to $250 for school and classroom out of pocket costs.
  • Businesses will have the amount they were able to deduct for qualifying equipment purchases reduced from $500,000 to $25,000.

In Part II of this series, we will discuss health insurance mandates and other tax law changes in 2014.

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