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In an article yesterday in the Wall Street Journal, Laura Saunders gave five important tax breaks that are being extended to 2014. These provisions had expired as of January 1, 2014, but it was widely expected that Congress would eventually choose to extend them, as they have for each of the last few years. As usual, Congress waited until the 11th hour, but I guess we can be glad they didn’t, as in years past, wait until January and then extend them retro-actively to December 31st. (As if that helps anyone, since you would have had to act in December on faith if you wanted to take advantage of them!)
But I digress. Here are the five breaks, with commentary from Ms. Saunders:
“In the nick of time, Congress has extended dozens of tax breaks that expired at the beginning of 2014. But there’s a catch: Unlike with previous extensions, which were for two years, this is only for the current year—so on Jan. 1, 2015, the uncertainty will begin all over again. Meanwhile, taxpayers have just two weeks to make final plans to use the 2014 benefits just approved. Here are five notable ones.

1) State and local sales-tax deduction – As in years past, taxpayers can choose to deduct the sales tax they paid in lieu of taking the deduction for state and local income taxes.  Although this write-off is available to all, people in states that don’t have an income tax, such as Washington, Florida and Texas, are most likely to use it.

2) IRA charitable transfer – This popular provision allows owners of individual retirement accounts who are 70½ and older to give up to $100,000 of their IRA assets directly to charity each year. There’s no deduction for the charitable gift, but the donation doesn’t count as income—which can have benefits such as helping lower Medicare premiums. The donation of IRA assets to charity also can count toward the owner’s required annual withdrawals

3) Tax relief for mortgage-debt forgiveness – When a homeowner negotiates a reduction in the balance of a mortgage, the amount forgiven normally counts as income. This provision offers relief.

4) Tuition and fees deduction – This benefit allows a deduction of up to $4,000 a year for qualified expenses for college or other post-high-school education.

5) Educator-expense deduction – Another highly popular break, this allows millions of K-12 classroom teachers and others who are eligible to deduct up to $250 of unreimbursed expenses for classroom supplies.”

Time is short to take advantage of any of these, so talk to your financial advisor if you think one might be applicable to you.