Many tax deductions, credits, and incentives, are on a year-to-year extension basis, and, depending on the mood of Congress, may or may not be extended to this year. There are deductions which have expired in 2014 and unless Congress acts to retroactively extend them to the beginning of 2015, will not be available as tax incentives for 2015. Here is a list of expired tax provisions:
- Deduction for up to $250 of expenses for elementary and secondary school teachers for school books, supplies , and other materials they use for their classrooms.
- Exclusion from income a discharge of indebtedness for your primary residence. This means that if your home is foreclosed or you sold it in a short sale in 2015, the debt you owed on the mortgage and didn’t repay is now taxable.
- Deduction for the cost of mortgage insurance premiums as qualified residence interest.
- Deduction for general sales tax in lieu of state income tax. This allows a deduction for sales tax where your state income tax paid is very low or if you live in a state with no income tax.
- Deduction for tuition and other related college expenses for individuals with low gross income. This should not be confused with the American Opportunity Tax Credit for qualified college expenses which does not expire until December 2017. In some cases, the deduction is more of a tax advantage than the credit.
- A credit of 10 percent of the cost of qualified energy-efficient improvements. Qualified improvements include adding insulation, energy-efficient exterior windows and doors, and certain roof. Additionally, a credit is available for certain high-efficiency heating and air-conditioning systems, as well as high-efficiency water heaters and stoves that burn biomass fuel. There is a lifetime limitation of $500, of which only $200 may be used for windows.
There are two different bills in Congress, one in the Senate and another in the House, to extend some or all of these incentives. In the past, they have either been extended late in December or in the beginning of the next year, retroactively. This makes much of your tax planning difficult if not impossible.
Felecia Sternbach and Ellen Rose are both CPAs with over 25 years of tax, accounting, and business experience. They are knowledgeable, client-focused accountants who make sure their clients get the best possible service and attention. Their accounting practice focuses on the needs of small businesses and start-ups. They are especially passionate about helping entrepreneurs succeed and thrive in today’s very competitive and challenging business climate.
Sternbach & Rose, CPAs – Where you’re never just a number.