I wish I could tell you that Uncle Sam is about to turn into Santa Claus — by renewing all the federal tax breaks that expired in 2014. BUT I CAN’T — not yet anyway. Last night, the U.S. Senate passed a tax bill (H.R. 5771) by a wide margin (76 to 16). And the White House has indicated President Obama will sign this bill into law. The question is when.
If and when the President does sign, the new law will apply retroactively to January 1, 2014, for many of the popular tax provisions that expired on Dec. 31, 2013.
Some of the key provisions we’re keeping a close watch on:
- The option to deduct state and local sales taxes, for those who of us who don’t have a state income tax.
- For people over age 70 1/2, tax-free distributions of up to $100,000 from Individual Retirement Accounts (which can also “count” as Required Minimum Distributions) IF donated directly to a public charity.
- Higher allowance (up to $500,000) for the direct write-off of business personal property, under “Section179.”
- The 50% bonus depreciation on qualified business property.
- Incentives to contribute to qualified conservation projects.
- The deduction for qualified tuition expenses.
- The $250 “above-the-line” deduction for teachers’ classroom materials.
- The tax break to encourage workers to use mass transit. For this year, the value of employer-provided transit passes and van pools would be excluded from employees’ incomes at the same dollar amount ($245 per month) as parking.
Newly featured in H.R. 5771: Tax-favored accounts for disabled individuals. This is a major development, and I will be writing more on this when it is approved.