Feb 17, 201402:17 PMSmall Business, Big Ideas
with Jean Willard
What’s new in the tax code?
(page 1 of 2)
Tax time is upon us, and the IRS is finally accepting all tax returns. Individual returns were delayed this year, with an IRS first-acceptance date of Jan. 31. Despite this delay, the IRS did not extend the April 15 deadline. So once again we have a shortened tax season. But what else has changed?
If you are paying attention to the news, you are hearing about the new taxes — 0.9% on earned income for high-income taxpayers and the 3.8% net investment income tax. So if you are a higher-income individual, you need to realize that additional taxes are now in place. The forms accompanying new taxes are always delayed until the last minute, and this year was no exception. Final regulations are still coming out, so the details continue to be finalized.
But what’s gone? Here are a few of the provisions that expired at the end of 2013:
- The exclusion of IRA distributions directly to charities. Although we didn’t see a lot of people using this provision, it was a wonderful tool to help the charity of your choice without paying tax on the IRA first.
- The tuition deduction. The teacher classroom expense deduction of $250 expired — again. This provision has expired before and has been reinstated in tax bills.
- PMI mortgage insurance deduction.
- The optional sales tax deduction.
- Certain credits have expired, and others have been made permanent.
- Research, work opportunity, and personal energy credits.
- Business provisions have also been affected: The 50% bonus depreciation expired. Section 179 limits were lowered and certain provisions for leasehold improvements and restaurant property 15-year lives expired as well.
Additionally, a few provisions, including those below, have been made permanent:
- The child and dependent care credit and child tax credit.
- Higher AMT exemptions have now been made permanent and will be indexed for inflation.