If you were hoping for 2014 to be a good year when it came to tax related items we’re sorry to be the bearers of bad news but it’s not happening. That Congress is actually talking and starting to get things done is nice. Unfortunately, unless they take up some of the items on this list there’s little benefit to we, the taxpayers, in 2014. If you acted quickly before the bell tolled on December 31st you got the best you were probably going to get.
It’s not all bad, and in actuality, saying things are bad is kind of a misnomer. What’s happened is all the tax breaks that were pushed through during the Bush Administration, as well as some of those the Obama Administration allowed in 2009 and 2010 when the economy was in the tank, have expired. It’s good and bad news in a way. The good news is that the government will generate more income, and with spending still in check the deficit will come down. The bad news… there’s a lot that’s going to cost us, or not benefit us anymore. Let’s look at the list:
1. Mileage reimbursement falls from 56.5 to 56 cents a mile. That’s not too bad but it’s still less for our business expenses.
2. Teachers were allowed to deduct $250 worth of pencil and paper purchases if those items went for their students; yes, some teachers actually do this. Unfortunately, that deduction is gone.
3. If you missed the cutoff for the 10% tax break on energy efficiency that’s too bad because it’s gone now.
4. We used to be able to write off mortgage premiums if we put down less than 20% on a home purchase. It’s not totally gone, but it’s only available if you itemize.
5. In 2013, if you commuted to work you could deduct up to $245 a month, the same as the parking deduction. In 2014 the commuter benefit drops to to $130, but the parking benefit is the same.
6. Did you try to conserve by buying an electric car? You used to get a tax credit of $7,500; that’s now gone.
7. If you or anyone invested in a small business you used to be able to write off 100% of it. That now goes to 50%.
8. Late in 2013 there was a lot of talk in Congress about extending a tax benefit to help college students or parents of around $4,000; it didn’t pass, so it’s now gone.
9. The standard deduction rises to $6,200 (was $6,100) for single taxpayers and married taxpayers filing separately. The standard deduction is $12,400 (was $12,200) for married couples filing jointly and $9,100 (was $8,950) for heads of household.
10. As you know, the Affordable Care Act has gone into effect. You actually get a tax credit for this of 72.5% as long as you pay more than 50% of the premiums on a qualified plan. This means if you’ve qualified for a reduction of more than 50% of your premium, you can’t write anything off.
11. While we’re talking about health care, if you don’t get it or have coverage at least 8 months during the year it’ll cost you either a flat fee of $95 or 1% of your taxable income per uninsured adult and $47.50 per child (up to $285 for a family), whichever amount is higher. By the way, it jumps much higher in 2015.
12. The top tax rate in the country goes to 39.6% and is for individuals that make $400,000 or married couples filing jointly who make $450,000.
13. While we’re talking about tax rates, those folks who make more than $200,000 ($250,000 for married couples) will have to pay a Medicare surtax in 2014.
14. If you’re self employed, you get a little bit of a break. You get to claim a deduction for your home office of $5 per square foot as opposed to going through all those weird calculations your accountant has always had to figure out before.
15. The federal government is recognizing all same sex marriages this year, which means that gay couples will be subject to paying the marriage tax like every other couple this year, even if you’re living in a state that doesn’t recognize your marriage.
The one caveat we can give everyone is that there has been some talk that Congress might bring some of these back in 2014, in which case you’ll still get to make those deductions at the end of the year. We’ll see if it works out.
