Late Tuesday night, news crossed the wire that the Senate passed the “Tax Increase Prevention Act of 2014” (the “Act”) by a supermajority-exceeding vote of 76-16. The Act, which is predicted to be signed into law by President Obama within the next few days, provides a wide-ranging extension of tax breaks for individuals and businesses.
The original bill behind the Act was sponsored by Michigan’s own Dave Camp (R) of the 4th Congressional District, who originally introduced it on December 1st of this year, where it moved quickly through the House of Representatives behind strong bipartisan support before reaching the Senate. So much for a lame-duck Congress not getting anything done before the holidays!
The main effect of the Act is the retroactive extension of several individual and business tax deductions and credits in the Internal Revenue Code that actually expired prior to the end of 2014 (with most having expired at the end of 2013). Granted, because of the late date of the Act passing through Congress, the real effect of the Act falls short of true “tax reform”, as most individual and business taxpayers have made their tax planning decisions earlier this year. So while it is too late for most to change those decisions within the next two weeks, there is still a good chance that many taxpayers will reap some degree of benefit from the Act.
Some of the specific tax breaks that were extended through the end of 2014 include:**
• State and local tax deductions for sales tax instead of income tax
• Section 179 “write-offs” and business expensing
• Bonus depreciation
• Charitable IRA rollover
• Research credits
• Qualified tuition and related expense deductions
• “Work Opportunity” hiring credits
• Mortgage loan forgiveness tax exclusion
• Home energy credits
• Teacher classroom expense deductions
• Various energy tax extenders
** Please note that this is only a partial list – there were over 50 tax breaks extended by the Act.
So overall, please consider consulting with an accountant or tax planner to ensure that your year-end tax decisions (for what it’s worth over the next two weeks) and tax returns to be filed in the coming months (where realistically, most will benefit) take into account the many individual and business tax breaks extended through the Act. As to more general tax planning as it relates to your personal estate planning and businesses, as well as assistance with general business law matters, please do not hesitate to contact us to speak with one of our business or estate planning attorneys.