The close of 2013 is quickly approaching which means Tax Season is around the corner! There are several tax deductions being eliminated (assuming Congress does not extend any of them). The deductions may help you with your 2013 tax return. For example, you have two months left to install energy efficient appliances to receive the tax break. Take a look at the ...list and see if you can take advantage of these expiring tax deductions.
1. Teachers' classroom expense deduction. You can deduct up to $250 worth of unreimbursed classroom expenses. It shouldn’t matter if you take the standard or itemized deductions, teachers can still take this deduction before they get to adjusted gross income (AGI).
2. Exclusion of cancellation of indebtedness on principal residence. The U.S. tax code taxes forgiven debt. BUT, if your principle residence is foreclosed or sold in a short sale, you are allowed to exclude up to $2 million of forgiven debt from your taxable income.
3. Transit benefits. This year, employees can spend up to $245 pretax per month on transit benefits such as rail passes, the same $245 pretax you can spend on parking. This will drop to $130 per month pretax for rail, and remain the same for parking at the end of this year.
4. Mortgage insurance premiums. If you are a homeowner and you pay for private mortgage insurance, those premiums were deductible in 2012/2013. This expires but homeowners who itemize their deductions can still deduct mortgage interest.
5. IRA distributions to charity. If you are older than age 70 ½, you are required to take minimum distributions from your individual retirement accounts. This allows you to contribute money to charity without counting it as income.
6. State and local sales tax. When you pay state income tax, you can deduct that amount from your federal taxes if you itemize. For states like Florida or Texas (no income tax), you can't take advantage of that deduction. With this you can deduct state sales tax if your state doesn't have sales tax or if the amount you paid in sales tax was higher than income tax.
7. Electric vehicles. If you bought or plan to buy in the next two months, a qualified electric plug-in vehicle, you may be eligible for a tax credit of up to $7,500.
8. Remodeling your home for energy efficiency. Homeowners who remodel or upgrade to an energy efficient appliance or large home fixture (IE: windows, air conditioner) can take a credit of up to $500 over their lifetime. There is another $500 credit available for energy-efficient appliances.
Remember, all of these expire this year!
Call David M. Green Bookkeeping and Tax Service we will save you time and money and find you every legal tax deduction that you are entitled to.