The Senate passed The Tax Increase Prevention Act of 2014 this week extending a package of expiring tax provisions through 2014. The President is expected to sign the bill in the next few days.
The Bill extends many popular tax breaks affecting businesses including the research and development credit, enhanced tax depreciation deductions including 50% bonus depreciation on new equipment placed in service in 2014, and increased expensing limitations (Sec. 179). The Sec. 179 limit of $500,000 was reinstated for tax years beginning in 2014. For those of you using calendar year tax years, you will need to place property in service by the end of 2014 to benefit from these provisions.
In addition to the extensions affecting business, certain energy incentives and individual tax provisions were extended. Highlights relating to individuals include the following:
- Deduction of state and local sales taxes in lieu of state and local income taxes;
- Tax-free direct transfer of up to $100,000 from an IRA to charity for those who are age 70 ½ or older;
- Above-the-line deduction for qualified tuition and related expenses.
These provisions apply to tax year 2014 only; we will start the legislative process all over for tax year 2015. If you would like to discuss any aspects of the tax extensions with a tax professional, contact our office at (317) 569-4181. Alerding CPA Group is an Indianapolis-based public accounting firm.