The Senate has finally acted on the Bill that the House passed earlier in the month to extend many taxpayer friendly income tax provisions which previously expired at the end of 2013. Unfortunately, the extension will only have a two week shelf life and therefore will expire again on December 31, 2014. The President is expected to sign the bill into law before the end of this week.
Due to how long it took for Congress to act on these extensions, it is most likely that the start of the tax season and the date in which tax returns can start to be filed with the IRS will be extended to late January or early February (similar to last year when Congress also allowed politics to delay implementation of needed tax legislation).
Many of the favorable business related provisions can be applied without the need for transitional application rules. However, individual provisions including the ability for those over 70 to take tax free distributions from individual retirement accounts for charitable purposes will need special rules given that most taxpayers have already taken their annual required minimum distributions (RMDs) for 2014.
Below is a summary of the provisions applicable to individuals that are part of the Senate Bill. In addition to the provisions listed below, there are also over 30 provisions related specifically to businesses.
• Tax credit for purchasing health care insurance
• Tax deduction for expenses of elementary and secondary school teachers
• Exclusion from gross income of imputed income from the discharge of indebtedness for a principal residence
• Equalization of the exclusion from gross income for employer-provided commuter transit and parking benefits
• Tax deduction for mortgage insurance premiums
• Tax deduction for state and local general sales taxes in lieu of state and local income taxes
• Tax deduction for contributions of capital gain real property made for conservation purposes
• Deduction from gross income for qualified tuition and related expenses
• Tax-free distributions from individual retirement accounts (IRAs) for charitable purposes
• Tax credit for residential energy efficiency improvements
• Tax credit for energy efficient new homes
• Tax credit for energy efficient appliances
• Increased expensing allowance for business property including computer software and depreciation of qualified real property
• Additional (bonus) depreciation of business assets and the election to accelerate the alternative minimum tax (AMT) credit in lieu of bonus depreciation