Congress has extended many popular tax provisions that significantly impact individuals and businesses. Late on December 16, 2014, the Senate, following earlier action in the House of Representatives, voted 76 to 16 to pass an identical version of H.R. 5771, the Tax Increase Prevention Act of 2014 (2014 TIPA). This legislation renews, at least for tax year 2014, a retroactive extension of business and individual tax provisions that expired at the end of 2013, and comes just before taxpayers and the IRS gear up for the 2015 tax filing season.
The legislation also extends multiemployer pension provisions first enacted under the Pension Protection Act of 2006 (2006 PPA).
In addition, the extenders legislation adds “ABLE Accounts” that will help disabled individuals save for their future much like the popular §529 education plans and accounts.
The bill’s provisions are summarized below.
Individual Tax Extenders
• Extension of deduction for certain expenses of elementary and secondary school teachers – The legislation extends for one year (through 2014) the $250 above-the-line tax deduction for teachers and other school professionals for expenses paid or incurred for books, supplies (other than non-athletic supplies for courses of instruction in health or physical education), computer equipment (including related software and service), other equipment, and supplementary materials used by the educator in the classroom. [I.R.C. §62(a)(2)(D)]
• Extension of exclusion from gross income for discharge of qualified principal residence indebtedness – Continuing relief for distressed homeowners, the legislation extends for one year (through 2014) the ability to exclude from gross income the amount of mortgage debt on a personal residence discharged as part of a sale, short sale, etc. [I.R.C. §108(a)(1)(E)]
• Extension of parity for employer-provided mass transit and parking benefits – The legislation extends for one year (through 2014) the $250 monthly maximum exclusion amount for transit passes and van pool benefits so that these transportation benefits match the exclusion for qualified parking benefits. [I.R.C. §132(f)(2)]
• Extension of mortgage insurance premiums treated as qualified residence interest – The legislation extends for one year (through 2014) the ability of homeowners to treat mortgage insurance premiums (MIP) as deductible interest for purposes of the mortgage interest deduction. However, the deduction phases out ratably for taxpayers with adjusted gross income (AGI) of $100,000 to $110,000 (with each income amount reduced 50% for married taxpayers filing separately). [I.R.C. §163(h)]
• Extension of deduction of State and local general sales taxes – The legislation allows taxpayers in 2014 to elect to take an itemized deduction for state and local general sales taxes in lieu of the itemized deduction permitted for state and local income taxes. [I.R.C. §164(b)(5)]
• Extension of special rule for contributions of capital gain real property made for conservation purposes – The legislation extends through 2014 the increased contribution limits and carry-forward period for amounts in excess of certain contribution limits for contributions of appreciated real property (including partial interests in real property) for conservation purposes. Certain individual and corporate farmers and ranchers also are eligible for the enhanced deduction. [I.R.C. §170(b)(1)(E)]
• Extension of above-the-line deduction for qualified tuition and related expenses – The legislation extends through 2014 the “above-the-line” tax deduction for qualified education expenses. The deduction is capped at $4,000 for individual filers with AGI of $65,000 or less ($130,000 for joint filers) or $2,000 for individual filers with AGI of $80,000 or less ($160,000 for joint filers). [I.R.C. §222]
• Extension of tax-free distributions from individual retirement plans for charitable purposes – The legislation extends through 2014 tax-free charitable contributions from an Individual Retirement Account (IRA) of up to $100,000 per taxpayer, per tax year for taxpayers who are at least 701/2. [I.R.C. §408(d)(8)]
About Leonard L. Shober
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