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Blink and you’ll miss them: Tax extenders, p. 4

| Jan 24, 2015 | Uncategorized |

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.

State and local tax deduction: The IRS allows taxpayers who itemize their deductions on Schedule A to include any state and local income taxes paid during the year. If you live outside of California in a state without an income tax, don’t be discouraged: Congress has a consolation prize for you. Just for 2014, those taxpayers may deduct state and local general sales taxes — a boon to anyone who made a major purchase last year.

Tuition and fees deduction: Anyone who has written a check for college tuition can breathe a little more easily. Congress renewed the above-the-line deduction of tuition and fees. An above-the-line deduction is one that taxpayers can take advantage of without having to itemize.

Qualifying taxpayers may take a maximum deduction of $4,000. It may seem like a drop in the ocean of college expenses, but, remember, the deduction lowers your taxable income. You may drop into the lower tax bracket and, as a result, see significant savings.

Unreimbursed educator expenses deduction: Tuition is not a concern with public schools, but funding is. Teachers often pay for classroom supplies out of their own pockets. Books, computer equipment, construction paper — if the school system has not reimbursed the educator, those expenses may be deducted above the line. The maximum deduction is $250.

Energy efficiency deduction: The federal government wants taxpayers to reduce their carbon footprint by increasing the energy efficiency of their residences. Improvements, including appliances, can earn a tax credit of as much as $500.

Next steps? First, remember that this is a partial list of some more common tax breaks. Make sure you understand all of the extenders so you can take advantage of them while they last. Or, rather, lasted — they expired on Dec. 31.

Second, if you are confused about your obligations or have questions about tax strategy, you should consider contacting an experienced tax lawyer for help.

Source:Forbes, “10 Expired Tax Provisions That Might Affect You In 2014,” Kelly Phillips Erb, Nov. 24, 2014

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