So Congress still hasn’t approved the normal group of tax extenders….items they end up approving every year…at the end of the year… and making retroactive to the beginning of the year. Reason for this? They like to tack on extra stuff to get them passed with the package of extenders….. eye roll. Also, when they show the projections for how much these cost in tax dollars, it looks like a lot less looking at one or two years at a time instead of as a ten year projection if they were made permanent.
So, once again, we are waiting to see if the following will be extended:
- the deduction of $250 by teachers for out of pocket money spent for classroom supplies
- the ability to deduct state and local sales tax (from a car purchase perhaps) instead of state and local income taxes
- the “above the line” adjustment for Tuition and Fees paid
- the ability to deduct up to $2 million of mortgage debt forgiveness on a principle residence
- the ability to make a direct contribution from a retirement account to a charitable organization, therefore, avoiding taxation of it
So don’t go buy that car just yet if the reason you are getting it is for the tax deduction Make sure you will love it without it getting you a tax break. Maybe get one in your favorite color or a color that best matches the color outfits you normally wear.
Also, if you are forced to give up your home, and the bank will forgive $2 million, just let them. Better to pay tax on that forgiveness than owe $2 million, right?
For businesses….here are the main extenders businesses are waiting to hear on:
- The increase from $25,000 to up to $500,000 in Section 179 expensing on business assets purchased
- The 50% bonus depreciation on assets purchased
- The research and development credit
No fun for businesses to have to wait to hear on these. Not easy to properly plan for the year when you don’t know what the rules are that year.