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8 Tax Breaks Expiring at the End of 2013 From mortgage insurance premiums to teachers’ classroom expenses, don’t miss out on these tax breaks
Source:
money.usnews.com
- Dec 16, 2013
By Susan Johnston
April 15 may seem like a long way off, but with a little planning before the end of the year, you could take advantage of tax breaks to help you lower your tax bill.
Several tax provisions are scheduled to expire at the end of this year. Many of these tax breaks have been extended in the past, so it's possible Congress could extend them again over the next few months. "It could be in very late December, at which point it's too late to do much tax planning, or January when you really can't do anything," cautions Richard Baum, a partner at accounting firm Anchin, Block & Anchin LLP. The government shutdown could also delay the start of tax-filing season a few weeks as well.
Here's a look at eight tax breaks to consider now before they disappear.
1. Teachers' classroom expense deduction. Eligible educators who work in a school providing primary or secondary instruction can deduct up to $250 worth of unreimbursed classroom expenses. This is an above-the-line deduction, which means teachers can take this deduction before they get to adjusted gross income and regardless of whether they itemize other deductions or take the standard deduction, according to David McKelvey, a tax and business consulting partner at Friedman LLP.
[See: 9 Little-Known Ways to Pay Fewer Taxes.]
2. Exclusion of cancellation of indebtedness on principal residence. The U.S. tax code treats forgiven debts as taxable income. However, if your principle residence is foreclosed or sold in a short sale before the end of the year, this provision allows you to exclude up to $2 million of forgiven debt from your taxable income. "I'm hopeful that [this provision] gets extended because there's still a lot of foreclosures in the pipeline," says Keith Spritz, managing director of accounting firm CBIZ MHM LLC. "If you're in that position, at least it provides an easy benefit for you to take advantage of." If your home is on the verge of a foreclosure or short sale, you may want to nudge along the process before the end of the year to ensure you're eligible for this tax break.
3. Transit benefits. In 2013, employees can spend up to $245 pretax per month on transit benefits such as rail passes, which is on par with the $245 pretax they can spend on parking. That parity is scheduled to sunset at the end of this year so that the benefit for public transportation would drop to $130 per month pretax, while higher parking benefits will remain.
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Category: General Business
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