tax_lawIn a flurry of year-end activity, on December 16, 2014, Congress passed H.R.5771, the Tax Increase Prevention Act of 2014 (TIPA), which the President is expected to sign into law very soon. The new law retroactively renewed for the 2014 tax year only the following popular tax breaks:

Business Tax Extenders

  • 50% Bonus depreciation for new qualified assets purchased before 1/1/2015.
  • Increased Section 179 expensing limitation of $500,000 and treatment of certain real property as Section 179 property.
  • Temporary exclusion of 100 percent of gain on certain small business stock.
  • Reduction in S-corporation recognition period for built-in gains tax.
  • Research credit.
  • Extension of work opportunity tax credit.

Individual Tax Extenders

  • State and local sales tax deduction
  • Teachers’ classroom expense deduction.
  • Exclusion from income of cancellation of mortgage debt on a qualified principal residence.
  • Mortgage insurance premiums treated as qualified residence interest.
  • Above-the-line deduction for qualified tuition and related expenses.
  • Tax-free distributions from IRAs for charitable purposes for individuals age 70 ½ and older

Energy Tax Extenders

  • Energy credit for up to 10% of the purchase price of non-business energy property which provides a maximum lifetime credit of up to $500 for individual taxpayers

In addition to retroactively extending more than 50 expired tax provisions, this legislation also includes the ABLE Act of 2014, which provides for tax-favored accounts that will allow disabled individuals to save money to pay for their disability expenses beginning in 2015. Please contact us if you would like more information relating to this provision.

For the complete list of extended provisions, visit: Congress.gov H.R.5771.

This legislation opens the door for significant tax savings for businesses and individuals on their 2014 returns. There are only a couple weeks remaining to implement your specific year end tax planning strategies. Should you have any questions regarding this information and how it may affect your particular situation as well as other planning needs, please give us a call at 239.433.5554.