As 2016 starts to move forward, Congress seems especially less likely to agree on legislation extending all the tax breaks that have currently expired. S. 1946, Tax Relief Extension Act of 2015, generally provides for a two-year extension while the Tax Cuts for America Act of 2015, H.R. 1808, has only seven tax provisions, and the bill would extend those benefits for only 2015 retroactively.
In recent tax years, taxpayers have faced a great deal of uncertainty in determining whether they can continually and regularly depend on tax incentives to help them lower their taxes. At the beginning of 2013, Congress enacted the American Taxpayer Relief Act of 2012, which extended 51 provisions for two years retroactively through the beginning of 2012 and through 2013.
In December of 2014, in the Tax Increase Prevention Act of 2014, Congress extended most of these provisions for one year retroactively to the beginning of 2014, but for only one year, so they expired again at the end of 2014. Unlike in most previous years, Congress expended very little effort this summer to fix the situation with expired deductions, and, there was not much mention during 2015 legislative sessions of making any of the extended provisions permanent.
Tax incentives for individuals that expired at the end of 2014 include:
- 62(a)(2)(D) deduction for certain expenses of elementary and secondary school teachers, which allows teachers to deduct up to $250 they spend to buy books, supplies, computer equipment, and other materials for use in their classrooms.
- 108(a)(1)(E), which excludes from gross income discharge of qualified principal residence indebtedness income.
- 132(f), which proves parity between the exclusion for employer-provided mass transit and parking benefits by making the limit for the monthly tax exclusion for employer-provided transit passes and vanpools the same as the limit for employer-provided parking benefits.
- 163(h)(3) treatment of mortgage insurance premiums as qualified residence interest, which permits a taxpayer whose income is below certain thresholds to deduct the cost of premiums on mortgage insurance purchased in connection with acquisition indebtedness on the taxpayer’s principal residence.
- 164(b)(5) deduction for state and local general sales taxes in lieu of a deduction for state and local income taxes;
- 170(b) special rule for contributions of capital gain real property made for conservation purposes, which permits qualified conservation contributions to be deducted up to 50% of a taxpayer’s contribution base (100% for qualified farmers and ranchers).
- 222, which provides an above-the-line deduction for qualified tuition and related expenses.
- 408(d)(8), which allows taxpayers to distribute up to $100,000 in qualified charitable distributions from individual retirement plans without including the distributions in income.
If you have questions about which deductions have expired and are presently subject to congressional extender legislation, and which may pertain to your particular circumstances, call THE TAX EXPERTS AT THE Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation call 212-490-0704.
