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Expired Tax Breaks Begin The Path Toward New Life

posted Apr 7, 2014, 7:14 AM by Ann Sullivan   [ updated Apr 7, 2014, 7:14 AM ]
By John Stanford

April 4, 2014 -- As hopes of overhauling our outdated tax code depart alongside former Senator Max Baucus (he became our Ambassador to China) and current Representative Dave Camp (he plans to retire), the Congress begins its annual race to extend various tax credits and deductions—commonly called “extenders”—that expired at the end of the last year.

In this case, 55 tax extenders expired at the end of 2013, ranging from charitable deductions to business expensing. The Senate Finance Committee, overseers of any extenders package, began the process today by reviewing a bill to extend 45 of these provisions.

Senators lamented the need for another round of extenders instead of reforming the tax code at large. The new Committee Chair, Senator Ron Wyden (D-OR) went so far as to say this would be “the last extenders bill on my watch”—to general applause from his colleagues. History doesn’t stand on his side; we are nearing the 30th anniversary of the last major overhaul in 1986. Nevertheless, as far as 2014 is concerned, this is the Senate’s tax bill. 

Often, WIPP provides descriptions and summaries of legislation that convey the important elements without getting lost in the “weeds” of policy creation. In this case, the staff at Senate Finance did an excellent job of detailing these 45 provisions in a summary most of us can understand. I recommend flipping through the summary for more than just the business provisions, as there are some interesting personal extenders as well. Highlights include:

  • Deducting certain debt and insurance premiums on mortgages (# 2 & 4)
  • Tax-free donation of retirement monies to charity (#7)
  • New Markets Tax Credit (#12)
  • Work Opportunity Tax Credit (#16)
  • Reduction in S-Corp Recognition Period (#33)
  • Increased Section 179 Expensing  (#24)

While there is no guarantee that these tax provisions will be extended, this summary is our best insight into the priorities of the Senate Finance Committee. And as we all settle in to pay this year’s taxes in the next two weeks, it’s good to think about what we may be deducting this time next year.