We want to review just a few more tax extenders that Congress approved for the 2014 tax year. The tax season has officially started, so it's important to keep these and the rest of the extenders in mind as you prepare to file your return.
Tax filing season starts on Tuesday, Jan. 20. As you prepare your return, or work with a tax professional to prepare it, don't forget that Congress renewed some important tax deductions and credits before adjourning. We discussed the mortgage debt exception in our last two posts. While that may be one of the most high-profile extenders -- it was a terrific help to underwater homeowners during the financial crisis -- there are others that deserve a little attention.
We are circling back to our discussion of the tax extenders law passed by Congress just before the holidays. In our Jan. 5 post, we left off with a promise to talk about how a homeowner can handle an underwater mortgage. As a reminder, a mortgage is underwater when the borrower owes more than the home is worth. And, these tax extenders expired almost as soon as they were adopted; they apply to the 2014 tax year alone.
No one likes to discover they owe taxes after preparing their annual income tax returns. That unexpected obligation may interfere with a person’s monthly budget. Depending on the situation, a taxpayer may even be unable to pay the entire amount.
In mid-December, Congress finally acted on tax breaks that had expired at the end of 2013. The bill renewed deductions, credits and exclusions that taxpayers have come to rely on, but it is a good news/bad news law: The tax extenders were renewed for all of 2014 -- retroactive to Jan. 1 -- but no further. The slate was wiped clean once again as the 113th Congress handed the debate over to the 114th.