As 2015 comes to a close, taxpayers are once again facing uncertainty as Congress has yet to act on a host of important provisions that expired at the end of 2014.
Although these temporary tax provisions have been routinely extended for years, the possibility that Congress could let them remain expired or only extend a select number of them leaves taxpayers and their advisors in limbo as to how to properly plan. Still, there are many actions that can be taken to save tax dollars this year, even amidst the uncertain fate of extender legislation.
For individuals, the tax breaks that expired at the end of 2014 include:
• The option to deduct state and local sales and use taxes instead of state and local income taxes.
• The above-the-line deduction for qualified higher education expenses.
• Tax-free IRA distributions for charitable purposes by those age 70-1/2 or older.
• The exclusion for up-to-$2 million of mortgage debt forgiveness on a principal residence.
Some or all of these expired provisions may be retroactively reinstated, thereby opening up some truly last-minute year-end tax-planning opportunities, but as of yet, there’s no way of knowing if that will take place.
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