Several important tax provisions affecting individuals are slated to expire at December 31, 2013. There is no way to know now whether any of these provisions will be extended. Because of this uncertainty, taxpayers can take action now to avoid losing out on tax breaks:
The following provisions are slated to expire:
Optional sales tax itemized deduction. Individuals who are considering the purchase of a big ticket item may want to push the purchase into this year to achieve a higher itemized deduction for sales taxes.
Above-the-line deduction for qualified college tuition and related expenses. An individual may want to prepay 2014 first academic term tuition this year to increase 2013 tax savings from the expiring deduction.
Home mortgage debt forgiveness relief. For indebtedness discharged before Jan 1, 2014, taxpayers generally may exclude up to $2 million of mortgage debt forgiveness on their principal residence. A taxpayer who is in the process of attempting to secure such relief from his lender should take all possible steps to ensure that the discharge occurs before Jan 1, 2014.
Above-the-line deduction for expenses of elementary and secondary school teachers. An eligible educator is allowed an above-the-line deduction, not to exceed $250, for otherwise allowable books and supplies. A teacher who is not over the limit and who plans to purchase items in 2014 that would qualify for the deduction if it were still available should consider accelerating the purchases to 2013 to gain a deduction this year.
Non business energy credit. Subject to limits a taxpayer may be able to take a credit for 10% of the amount paid in 2013 for qualified energy home improvements, such as insulation, exterior windows and skylights, and exterior doors and home energy property costs, such as electric heat pumps, central air conditioners and water heaters. The credit is limited as follows:
. A total combined credit limit of $500 for all years after 2005
. A combined credit limit of $200 for windows for all tax years after 2005
. Credit limits for 2013 residential energy property costs
An individual who has not made full use of the credit and who is contemplating making such energy efficient improvements in the near future should do so before year-end to take advantage of the credit.
Mortgage insurance premiums treated as deductible interest. Mortgage insurance premiums paid or accrued by a taxpayer in connection with qualified residence acquisition indebtedness are deductible. However this provision does not apply to premiums paid or accrued after December 31, 2013. Prepaying 2014 premiums will not yield a deduction.