William A. Smith
Seven New Tax Breaks Disappearing For 2014
In our last post, we talked about several tax breaks you could be overlooking. Today, let’s talk about the seven tax breaks you will be missing the most when you file for your 2014 return.
1) Education related deductions
One deduction that parents and individual filers are going to miss is one that could net up to $4,000 for tuition and education-related expenses like books and supplies. Eligible tax filers received $4,000, $2,000, or $0 based on their modified adjusted gross income, or MAGI. Individual filers, whose MAGI fell below $65,000, or married couples under $130,000, received the full bonus assuming at least $4,000 in qualifying expenses. Make between $65,000 and $80,000 for individual filers and $130,000 to $160,000 for married couples, and you received $2,000. Anything beyond these MAGI levels, and your chance of a tuition and expenses deduction was phased out to zero.
2) State, Local and Use Taxes
Beginning in 2014, there is no longer an exemption allowing an individual to deduct state, local, and use taxes on their Schedule A instead of state and local income taxes. This tax break was especiallyuseful for residents in states that don’t have an income tax … like Texas. In total, residents in seven states (Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming) will be affected. For questions about this expected change, contact Bill Smith, your Tax Attorney of choice in the Dallas Metroplex.
3) Class Room Deductions
In previous years, including 2013, teachers were able to deduct up to $250 in out-of-pocket expenses used for school and classroom supplies. Best of all, this was a deduction that teachers didn’t have to itemize. Unfortunately, beginning in 2014, this deduction will be no more, much to the dismay of teachers across the country.
4) No Relief for Homeowners
Perhaps the most dangerous tax break lost in 2014 is the rollback of the Mortgage Forgiveness Debt Relief Act, which was signed into law in 2007 and has been extended a few times since then. Under the MFDRA, qualifying debt that would usually count as taxable income, such as a renegotiated mortgage, a short sale, or a foreclosure of a private residence, could be “forgiven” without counting against an individual’s income. As of 2014 that exemption is no more, and homeowners who renegotiate their mortgage, short-sell their property, or get foreclosed upon could face a huge tax bill. If you’d like to know more about this make sure you contact Bill Smith, your IRS Tax Attorney in Dallas.
5) Alternate Energy
While homeowners can still receive a credit for installing solar water heaters, solar panels, and wind turbines through 2016, they can kiss goodbye in 2014 the lifetime $500 cumulative credit offered between 2007 and 2013 for the installation of qualified windows, doors, and roofs, as well as other qualified heating and air conditioning systems designed to improve energy efficiency.
6) Public Transportation Commuters
Beginning in 2014, the average tax break that mass transit commuters can expect will drop by a whopping 47% to a maximum of $130 a month from $245 a month in 2013. If you have question on how this will affect you, contact Bill Smith
7) Small Business Owners
Small business owners are set to see huge tax breaks disappear in 2014. In 2013 and prior years, business owners were allowed to deduct up to $500,000 in qualifying expenses, rather than amortize them over time. Beginning in 2014 this deduction will drop an astounding 95% to just $25,000. There are around 23 million small businesses in the United States, which accounts for 55% of all jobs in this country. Needless to say, this will affect many, many people.
These are only a handful of the changes we will see when filing our 2014. For more information, contact Bill Smith, your Tax Attorney of choice in the DFW area.