2014 Tax Changes Individuals Should be Aware Of
Written by: Ryan Bouchey
It’s amazing to think that the less work Congress does, the better off we are. But this is exactly how 2014 has played out thus far compared to 2013. With 2014 being an election year, most Congressmen and women were on the road campaigning rather than disagreeing in Washington. While 2013 saw sequestration and the threat of a government shutdown, 2014 gave us very little volatility in the markets due to political disagreement. Now that the elections are over and Congress is going back to work, there are certain tax breaks that were available in 2013 which have not been extended for 2014…yet. There is the potential for Congress to implement these tax breaks before the year end, but if that does not happen, it’s important to be aware that these will not be available for the 2014 tax year.
1. Charitable IRA Rollover – In 2013 you were able to distribute an RMD directly from an IRA to a charity of your choice, known as a Qualified Charitable Distribution. While there was no deduction for these gifts, there also wasn’t any taxable income generated by the distribution. Unfortunately, this provision has expired this year and time is running out for Congress to extend it for 2014.
2. Tuition and Fees Reduction – As part of the George W. Bush tax cut legislation in 2001, households were able to deduct up to $4,000 worth of qualified education expenses. This pertained to higher education costs for a couple or their dependents. This was an income phase out deduction so it wasn’t available to everyone. But if you were able to use this deduction in 2013, it isn’t available to you again in 2014.
3. Mortgage Debt Relief Forgiveness – For distressed homeowners, a relief in the balance of their mortgage may be all they needed to help them get out of a troubled financial situation. In 2013, the reduction of your mortgage balance was not considered income to the homeowner. This provision has not been extended to 2014 and may cause “phantom income” to be taxed to those homeowners who can least afford to pay these taxes.