Tax Provisions Extended Just In Time
They may have waited until the 23rd hour, but members of Congress finally voted to extend more than 50 expired tax provisions slated to expire at the end of the year. Tuesday evening’s 76-16 vote in favor of the extensions was enough to send a collective sigh of relief among tax professionals nationwide. The bill will now be sent to President Barack Obama for his signature.
Many tax professionals were worried that Congress would postpone the vote until after the New Year, which could have postponed the start of the 2015 tax season and hurt those on the tax prep front lines, including the IRS, tax preparers and some software providers. But today is a new day and instead of planning for the worst case scenario, tax planning can commence as planned.
The Tax Increase Prevention Act of 2014, or H.B. 5771, temporarily extends several tax breaks and provisions while correcting some technical errors found in prior legislation. Including:
- Extensions that benefit individuals:
- A $250 above-the-line deduction for certain expenses of teachers
- An election to deduct state and local sales tax
- Tax-free charitable distributions from individual retirement accounts (IRAs)
- The private mortgage insurance (PMI) itemized deduction
- The energy efficient home improvement tax credit
- Extensions that benefit businesses:
- The work opportunity tax credit
- A research and experimentation credit
- The Section 179 expensing limit
- 50% bonus depreciation
A complete list of 2014 tax extenders can be found in this article, published by the Journal of Accountancy.
Another bill within H.B. 5771 was also up for Congressional consideration – the Achieving a Better Life Experience (ABLE) Act of 2014. The legislation seeks to provide for tax-favored accounts that allow those who are disabled to save money to pay for disability expenses. This portion of the ABLE Act amends the definition of personal holding company income, institutes certain inflation adjustments and, for employment tax purposes, allows for certified professional employer organizations to be treated as employers for work-site employees who perform services for customers of the organization.
The Tax Increase Prevention Act of 2014 is by no means a long-term fix. There were earlier proposals that sought to permanently extend some provisions while extending others for more than a year, but those suggestions were unable to find traction throughout the legislature. So, while we may be able to relax this year, we will likely have bouts of Déjà vu over the course of 2015.
By Lisa Beamer, CPA (New Philadelphia office)