Use Them or Lose Them

With the massive tax changes made at the beginning of 2013, it is hard to believe that many tax laws are still set to expire at the end of the year unless Congress acts. As the year winds down, now is a good time to review some of the key expiring tax provisions and take action if you wish to benefit from them.Creative Summer Jobs

Button Right Federal tax credit for energy-saving home improvements. This credit for qualified energy-saving home improvements expires in 2013.

right arrowBenefit: $500 credit (this is a lifetime credit, not annual) for energy saving purchases. The limit is $200 for windows and skylights.

Button Right Optional itemized deduction of sales tax in lieu of state income taxes. In low or no income tax states, you may use a sales tax itemized deduction instead of a state income tax deduction.

right arrowBenefit: If you made major purchases or live in a state with no/low income taxes your itemized deductions could be much higher.

Button Right Itemized deduction of qualified mortgage insurance premiums. Through 2013 you can continue to deduct your qualified mortgage insurance premiums as an itemized deduction.

right arrowBenefit: A meaningful increase in your itemized deductions.

Button Right Qualified higher-education tuition and expense deduction. You can offset the tuition and expense of qualified education using the tuition and fees deduction through 2013.

right arrowBenefit: Up to a $4,000 income deduction. Planning is required as this deduction may not be used in conjunction with many other educational tax benefits.

Button Right Numerous small business tax incentives. Many small business tax credits and accelerated depreciation incentives are also scheduled to expire after 2013. These range from bonus depreciation to the expiration of the research and development credit. If your business anticipates using any credits this year, it is best to review your situation.

Preview of Key 2014 Tax Figures

Employer InvestmentWhile official numbers for 2014 are not yet released by the Internal Revenue Service (IRS), many figures are based on formulas set within the Internal Revenue Code (IRC) and use the Consumer Price Index (CPI) published by the Department of Labor. They are noted here for your planning purposes:

Tax Brackets: While the actual income brackets for tax rates are not set for 2014, the rate of inflation that impacts the income levels for each tax rate is anticipated to raise the income brackets by approximately 1.7-1.8%. Please recall that beginning in 2013 there is a new 39.6% income tax rate in addition to a new Medicare surtax.

Personal Exemption: $3,950 in 2014 ($3,900 in 2013)

Standard Deductions:
Tax Year 2014 2013
Single $6,200 $6,100
Head of Household 9,100 8,950
Married filing Joint 12,400 12,200
Married filing separately 6,200 6,100
Dependents 1,000 1000
65 or blind: married Add $1,200 Add $1,200
single Add $1,550 Add $1,500
Other Key figures:
Tax Year 2014 2013
Estate Gift tax exclusion $5.34 million $5.25 million
Annual Gift tax exclusion $14,000 $14,000
Roth and Traditional IRA Contribution limit 5,500 5,500

Caution: Remember, these are early figures using the recently announced Consumer Price Index. Official numbers are released by the IRS later this year.

These tax benefits are gone after 2013