10 Tax Extenders That Could Save You Money This Tax Season!
Tax extenders are government-implemented tax breaks that can affect how you’re taxed on everything, including your mortgage, your business and your car. Congress typically votes on whether to continue the extenders — permanently or temporarily — when they expire every few years, just before the end of the year.
In December 2015, Congress voted to extend some tax breaks that had expired in December 2014. As you gear up for the 2015 tax season, make sure you understand the individual tax breaks that could save you some money.
10 tax breaks that could benefit you:
- Deduction of state and local general sales taxes
This deduction allows you to choose between deducting state and local income tax or state and local sales tax. This could be helpful to you if you made a large purchase and paid significant local sales tax.
- Individual retirement plan tax-free distributions used for charitable purposes
Individuals who are 70 ½ years old or older and are individual retirement account (IRA) owners may be able to exclude up to $100,000 per year from income distributions if they’re paid directly to a qualified public charity from the IRA.
- Child tax credits
Individuals with a dependent child under the age of 17 may be eligible for a credit up to $1,000.
- Enhanced earned income tax credits
This tax credit allows low- to moderate-income families with three or more children to receive a credit of up to $6,242.
- Educator expense deduction
This benefit allows teachers to deduct up to $250 for money spent on materials and supplies for students. If you and your spouse both teach, you can deduct up to $500!
- Employer-provided mass transit and parking excluded from income
Transit passes and vanpool benefits are now permanently excluded from employee wages, at the same rate as employer-provided parking (up to $250 per month).
- Real property donations made for conservation purposes
This provision allows certain individual and corporate farmers and ranchers to deduct donations of real property for conservation purposes in an amount up to 100 percent of the taxpayer’s adjusted gross income.
- Mortgage debt forgiveness exclusion
Couples can still exclude up to $2 million ($1 million if filing separately) of forgiven debt through the 2016 tax year. This includes debt forgiven for financial crises like home foreclosures, short sales or loan modifications.
- Mortgage insurance premiums
Taxpayers can treat qualified mortgage insurance premiums as interest for purposes of the mortgage interest deduction.
- American Opportunity tax credit
Up to $2,500 (100 percent of the first $2,000 in qualified expenses and 25 percent of the second $2,000) per student may be deducted for the first four years of undergraduate education when enrolled at least half-time. A Lifetime Learning Tax Credit up to $2,000 (20 percent of the first $10,000 in qualified expenses) is also available for years 5 through graduate enrollment.
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Contributed by: Tina L. Moe, CPA, President & CEO