You’re Running Out of Time If You Want to Use These 13 Tax Provisions

Every year we say goodbye to certain things that we’ve come to know and love, and certain provisions of the tax law are not excluded from this treatment.  Portions of the tax law are intentionally added with short life-spans, and others are retired from time to time as their intended use has either changed or been eliminated.

Listed below are the tax provisions (according to the Joint Committee on Taxation) that will be expiring at the end of the year – some we’ll be glad to see go, others we’ll wish would stay around a while.  Some will be extended by Congress, either at the last moment or on into the new year, as has happened in the past.

Note: This article is aimed toward individual taxpayers rather than businesses, so I’ve only listed those provisions that will have impact on individuals.  There are quite a few provisions expiring that will impact businesses and employers as well – see the link above for the complete list.

Tax Provisions Expiring at the End of 2013

  1. Credit for certain nonbusiness energy property – this provision allows individual taxpayers with a credit for the cost of “building envelope components”, which include windows, doors, insulation, some roofing, and heating and air conditioning units.  The credit has expired in the past (2011) and was extended.
  2. Credit for two- or three-wheeled plug-in electric vehicles – pretty self-explanatory, a credit that applies to the purchase of these vehicles is also expiring.  The four-wheeled variety continues to be in play.
  3. Credit for health insurance costs of eligible individuals – I believe this one is supplanted by the credits available via the Affordable Care Act.
  4. Determination of low-income housing credit rate for credit allocations with respect to nonfederally subsidized buildings – this is a credit amount that is set annually, presently at 9%, but will change in 2014.
  5. Credit for construction of new energy-efficient homes
  6. Deduction for certain expenses of elementary and secondary school teachers – this credit has been available “above the line” for educators to help reduce the costs of self-provided (out of pocket) materials and supplies for the classroom.
  7. Discharge of indebtedness on principal residence excluded from gross income of individuals – dating from the Great Recession, a qualified cancellation of indebtedness for a taxpayer’s primary home was excluded from income.  After the end of 2013, this exclusion from income provision expires.
  8. Commuter credit – extended before, this credit provides train commuters a parity with car commuters, allowing a pre-tax deferral of income to help pay the expense of transit commuting.
  9. Deductibility of mortgage insurance premiums – through the end of 2013, it is allowable to deduct these premiums along with your interest on your primary or secondary qualified residence.
  10. Deduction for state and local general sales tax – This credit is allowed to replace the state and local income tax paid by the individual if the sales taxes are greater.  Word is that this one will likely be extended, but who knows?
  11. Charitable contribution of conservation easements or property – for the rest of 2013, if a taxpayer contributes property or easement to a conservation organization, such as a local land trust, special enhanced tax breaks will be available.
  12. Deduction for qualified tuition and related expenses – This credit allows for the reduction in income, above the line, for qualified tuition payments within limits.  It has always been coordinated with the other education credits – the Lifetime Learning Credit and the American Opportunity Credit.  This one has been extended in the past as well, so maybe it will again?
  13. IRA Qualified Charitable Distributions – for individuals over age 70½ this credit allows for individuals to contribute up to $100,000 directly from an IRA to a qualified charity, and exclude the distribution from income.  This one has expired a few times in the past and has limited impact due to limited usage by taxpayers, so it’s hard to predict whether it will be extended again.

Stay tuned as we finish out the tax year, to hear which of these credits may or may not be extended.  I for one am going to be on the edge of my seat.

About the author

Jim Blankenship, CFP®, EA

Jim Blankenship is the founder and principal of Blankenship Financial Planning, Ltd., a financial planning firm providing hourly, as-needed financial planning and advice. A financial services professional for over 25 years, Jim is a CFP professional and has earned the Enrolled Agent designation, a designation that qualifies him as enrolled to practice before the IRS. Jim is also a NAPFA-registered financial advisor, which designates him as a Fee-Only Financial Advisor.

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