Well Congress has done it again. Before adjourning for 2014, Congress passed the
Tax Increase Prevention Act of 2014
. What does this retroactive extension of temporary tax rules mean for you? They have added a couple “goodies”. If you’ve been wondering what federal breaks are once again available for your 2014 personal and business income tax returns, here’s an overview of selected provisions.
- Bonus depreciation. You can expense 50% of the cost of new property you acquired and placed in service during 2014.
- Section 179. The immediate expensing limit for new and used property purchased and placed in service during 2014 is $500,000. This is a substantial increase from the $25,000 deduction under the prior tax law. Your total Section 179 deduction is limited when you purchase $2 million or more of assets during the year.
- Qualified improvements. You can use a 15-year straight-line depreciation method for improvements to leased buildings, restaurant property, and the interior of retail establishments.
- Commercial building energy-efficient improvements. If you made improvements to your commercial building that helped reduce utility costs, you can claim a deduction of up to $1.80 per square foot.
- Residential energy-efficient improvements. Did you buy qualifying storm windows or doors for your home during 2014? The credit of 10% of the cost of improvements is back, up to a lifetime limit of $500.
- Charitable contributions from IRAs. When you’re age 70-1/2 or older, you could make a 2014 tax-free distribution to a charity from your IRA.
- State and local sales tax deduction. If you itemize, you can claim a 2014 deduction for these taxes instead of deducting state and local income taxes.
- Qualified tuition expenses. The law reinstated the above-the-line deduction of up to $4,000 for expenses you paid in 2014 for higher education for yourself or other family members.
- Teacher classroom expenses. If you’re a teacher and you paid out-of-pocket for books and certain other materials for use in your classroom, you can claim an above-the-line deduction of up to $250 for 2014.
Please call us for details about other tax breaks that will apply for your 2014 tax return.