Disappearing Tax Deductions

Disappearing Tax Deductions

While many of the usual temporary tax deductions and credits were made permanent in 2012, there's still a large number that weren't, and that are currently slated to expire or change significantly at the end of the year.

1. Educator's Expenses – IRC Sec. 62(a)(D)

What it is now: Grades K-12 teachers, instructors, counselors, principals and aides can deduct up to $250 of out-of-pocket costs above the line. 

What happens in 2014: Expires on Dec. 31, 2013

2. Cancellation of Debt — Mortgage Debt – IRC Sec. 108(a)(1)(E)

What it is now: Individuals can exclude up to $2 million ($1 million for married filing separately) of COD income from qualified principal residence indebtedness that is canceled because of their financial condition or decline in value of the residence. 

What happens in 2014: Expires on Dec. 31, 2013

3.Mortgage Insurance Premiums Deduction – IRC Sec. 163(h)(3)

What it is now: Taxpayers with AGI no greater than $109,000 can treat qualified mortgage insurance premiums as home mortgage interest. 

What happens in 2014: Expires on Dec. 31, 2013

4. Personal Energy Property Credit – IRC Sec. 25C

What it is now: A credit (subject to a $500 lifetime cap) is available for qualified energy efficiency improvements and expenditures to a taxpayer's principal residence. 

What happens in 2014: Expires on Dec. 31, 2013

5. State and Local Sales Taxes Deduction  – IRC Sec. 164(b)(5)

What it is now: Individuals can elect to deduct state and local general sales taxes instead of state and local income taxes. 

What happens in 2014: Expires on Dec. 31, 2013

6. Tuition and Fees Deduction – IRC Sec. 222

What it is now: Individuals can claim an above-the-line deduction for tuition and fees for qualified higher education expenses. 

What happens in 2014: Expires on Dec. 31, 2013

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