Expiring Tax Benefits
NEW YORK (MainStreet) The American Taxpayer Relief Act of 2012, passed in the early hours of January 1, 2013, made permanent the expiring "Bush tax cuts" from the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003.
However, the tax benefits that had become known as "the extenders" temporary tax breaks that had been consistently extended by Congress for one or two years at a time, often at the very last minute were extended for tax years 2012 and 2013 only.
The following "tax expenditures", available on 2013 tax returns, are scheduled to expire on December 31, 2013 -
- the $250 above-the-line deduction for qualified expenses of K-12 educators;
- the above-the-line deduction for up to $2,000 or $4,000 of qualified tuition and fees;
- the itemized deduction for mortgage insurance premiums;
- the option to claim an itemized deduction for state and local general sales taxes instead of state and local income taxes;
- the $500 lifetime maximum credit for qualified energy efficient improvements to a taxpayer's principal residence;
- the ability to make a direct tax-free transfer from an IRA to a charity and apply this as a Required Minimum Distribution; and
- the exclusion from income of the discharge of qualified principal residence debt.
Congress is expected to take on the issue of tax reform when it returns to Washington in the fall. But whether or not a tax reform bill will be passed before the end of the year, or that these expiring tax breaks will be extended or made permanent, is anyone's guess.
--Written by Robert D. Flach for MainStreet