179 Limits Raised

Were you one of the many small business owners anxiously awaiting an increase on Section 179 and other tax extenders? If so, then I have great news for you! Last night, by a vote of 76 to 16, Congress finally passed a bill to extend many of the expired tax provisions. Please note that unfortunately, they only passed them for 2014 meaning they will be retroactive to Jan. 1 and will expire again Dec. 31.

In order for these to become law, the President must also sign the bill (H.R. 5771 “The Tax Extenders Bill”) but that is expected to occur later this week.

Here are a few highlights of tax deductions you may be able to now take advantage of for 2014:

Section 179 Equipment Tax Deduction: this has been increased from only $25,000 to $500,000

State and Local Sales Tax Deduction: if you itemize your taxes, you will now be able to take a tax deduction for these taxes. This is especially helpful if you live in a state that does not have an
income tax

Home Mortgage Insurance Premiums Deduction: if you itemize your taxes, you will be allowed to take a tax deduction for PMI

Tax Free IRA Withdrawals for Charity: anyone over 70 ½ will be allowed to donate up to $100,000 from his or her traditional IRA, without incurring taxes, if the money is distributed directly to an eligible charity

Tuition Deduction for Education: even if you do not itemize your taxes, you will be able to deduct up to $4,000 spent on qualified tuition, fees, and related expenses for post-secondary

Tax Free Savings for Disabled Individuals: this is attached to the extender bill and is called the Achieving a Better Life Experience (ABLE) Act. With this Act, those who were disabled prior to age 26 will be able to contribute up to $14,000 a year, tax free, into an ABLE account. Not only that, but this provision will also apply to their family and friends!