With little time to spare until the new year, Washington has approved of the tax rules for 2014. This year, tax breaks that expired in 2013 will be brought back in a one year extension. While this is good news for the 2014 Tax Season, lawmakers will need to review and revise these measures for next year. In addition to the extension, all other major tax breaks will be continued. Businesses are allowed to claim half of their bonus depreciation and research & development credits while also claiming up to $500,000 of assets as expenses. These write-offs allow businesses to retain more of their sales revenue and re-invest it for the upcoming year but there is a limitation if the business purchased more than $2million in assets over a one year period.
Educators can still claim up to $250 in deductions to lower their adjusted gross income. This is a benefit in that it will exclude this amount from being taxed. If you are a homeowner, you are allowed to exclude $2million of forgiven debt on their primary residences and if you are 70 ½ years old and up you can make direct payments to charity from your IRA capping out at $100,000. Here’s to 2014!