Say Goodbye to These Tax Deductions

| January 3, 2014

Tax DeductionIn an effort to increase revenue, the federal government is bringing several tax deductions to an end. Many taxpayers will notice a significant difference when they file their 2014 taxes for the 2013 year. This will be the last year that some credits are available. Most people are not thinking about taxes during the holiday season, but it could be worth taking time now to utilize these vanishing tax credits.

Charitable IRA Distributions

Few taxpayers take advantage of this. People with IRAs who take the required minimum distribution and make charitable donations are able to avoid taxes on as much as $100,000 of their IRA distributions when it is used for charitable contributions in 2013.

PMI Premiums

Another significant tax deduction that is ending in 2013 and affects millions of people is the private mortgage insurance write off. Homeowners are able to write off PMI premiums, interest and taxes paid when they itemize deductions. This only applies to premiums accrued or paid prior to December 31, 2013. You are not able to allocate them to any time beyond the end of 2013.

Electric Vehicle and Transit Incentives

With all the concern about global warming and energy Independence, many people may be surprised to know this incentive is coming to an end. People who purchased a qualifying plug-in electric vehicle get a credit of as much as $7,500 for 2013. The make of vehicle along with the size of the battery pack determine the amount of the credit. People leasing an electric vehicle may also qualify for this credit.

The pretax deduction available for workers who use mass transit in 2013 is $245. That will drop to $130 in 2014 but the $245 parking deduction remains.

Energy Efficiency Credits

Homeowners making energy saving upgrades to their home, such as new insulation or door and window replacement, in 2013 have an available credit of up to $500 for expenses. While this incentive is scheduled to expire in 2013, the IRS.gov has current incentives available to homeowners.

There are numerous energy-related tax credits available to individuals that are going to end with 2013. Some are credits for property that is utilized to make alternative fuel, building energy-efficient homes and making energy-efficient appliances, and several credits related to producing bio-fuel and ethanol.

Education Expenses

Currently, the maximum deduction is $4,000 for qualified education expenses paid during 2013. It is scheduled to end on December 31. You can find more information on the best approach to paying for your education at Money Tips.

State Income and Sales Tax

Filers who itemize deductions will no longer have the option of choosing between deducting paid state income tax or paid state sales tax as a deduction. The sales tax deduction is not an option in 2014 and individuals will only be able to deduct state income taxes paid.

If you do qualify for any of these deductions, speak to your accountant or tax preparer now. Some of the current deductions are going to be eliminated for good and any new provisions or incentives are not expected until late 2014, long after the deadline for filing 2013 taxes.

Image credits: FreeDigitalPhotos.net Stuart Miles

Source: http://www.irs.gov/uac/Newsroom/Get-Credit-for-Making-Your-Home-Energy-Efficient

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