Individual Tax Extenders from the Tax Increase Prevention Act of 2014

In the recently enacted “Tax Increase Prevention Act of 2014,” Congress has once again extended a package of expired or expiring individual, business, and energy provisions known as “extenders.” The extenders are a varied assortment of more than 50 individual and business tax deductions, tax credits, and other tax-saving laws which have been on the books for years but which technically are temporary because they have a specific end date. Congress has repeatedly temporarily extended the tax breaks for short periods of time (e.g., one or two years), which is why they are referred to as “extenders.” The new legislation generally extends the tax breaks retroactively, most of which expired at the end of 2013, for one year through 2014.

Here is an overview of the key provisions which affect individual taxpayers in the new law.

• The $250 above-the-line deduction for teachers and other school professionals for expenses paid or incurred for books, certain supplies, equipment, and supplementary material used by the educator in the classroom;
• The exclusion of up to $2 million ($1 million if married filing separately) of discharged principal residence indebtedness from gross income;
• Parity for the exclusions for employer-provided mass transit and parking benefits;
• The deduction for mortgage insurance premiums deductible as qualified residence interest;
• The option to take an itemized deduction for State and local general sales taxes instead of the itemized deduction permitted for State and local income taxes;
• The increased contribution limits and carry forward period for contributions of appreciated real property (including partial interests in real property) for conservation purposes;
• The above-the-line deduction for qualified tuition and related expenses; and
• The provision that permits tax-free distributions to charity from an individual retirement account (IRA) of up to $100,000 per taxpayer per tax year, by taxpayers age 70 and ½ or older.

We hope this information is helpful. If you would like more details about these changes or any other aspect of the new law, please contact us.