Robins & Robins, P.A. Legal Blog

Wednesday, January 14, 2015

Law Extends Tax Breaks for 2014 Returns

Last month Congress accomplished its annual custom of extending various tax provisions that were scheduled to expire.  The so-called “tax extenders” bill was signed by President Obama and extended about 50 tax breaks that taxpayers may utilize when preparing 2014 income tax returns.  The short title for the bill is Tax Increase Prevention Act of 2014.

Among those benefiting from the legislation are teachers who can continue to deduct the first $250 of out-of-pocket education expenses without limitation. If teachers spend more than $250 on their classrooms and school materials, the excess can be combined with other miscellaneous itemized deductions. 

The tax-extenders bill also contains good news for property owners who have lost their homes through foreclosure or short sale.  Generally, if a lender cancels or forgives a debt, it becomes taxable income to the borrower. But, under Internal Revenue Code § 108, up to $2 million of cancelled debt can be excluded from income if the debt was used to acquire or improve a principal residence ($1 million if married filing separately).  The extension of this tax relief is much needed since housing markets across the country remain depressed and property owners continue to walk away from their homes.

The Act extends other tax deductions for individuals including the tax deduction of state and local sales taxes in lieu of income taxes, the tax deduction for contributions of real property for conservation purposes, and the deduction for qualified tuition and related expenses.  In addition, the tax credit for residential energy efficient improvements and the tax credit available to contractors who build energy efficient homes have been extended through 2014. 

Businesses may continue to take advanced depreciation deductions for equipment and other personal property bought in 2014.  Up to $500,000 of the cost of new equipment can be deducted in the year of purchase under I.R.C. § 179.  However, businesses should be cautioned since the § 179 expensing limit drops back down to $25,000 in 2015 unless Congress takes action.

The material provided here is for informational use only and should not be relied upon without consulting with your own tax professional. Christopher S. Robins is a Maryland-licensed attorney and certified public accountant.  If you would like to schedule a tax consultation with Chris, call the law office of Robins & Robins, P.A. at 410-749-3791.

Robins & Robins, P.A. based in Salisbury, MD serves the Delmarva Peninsula and Maryland ‘s Eastern Shore including Wicomico, Somerset, Worcester, Dorchester and Talbot Counties.

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