There were many tax deductions that were extended in 2013. However, there were some that were only extended for one year. Unless Congress extends the following tax deductions, they are set to expire on Dec. 31.
Educator's expenses -- Teachers, instructors, counselors, principals and aides for kindergarten through 12th grade, can deduct up to $250 out-of-pocket costs reducing their taxable income.
Cancellation of debt-mortgage debt -- Not long ago, I described that the cancellation of mortgage debt up to $2 million dollars (married filing jointly) or $1 million for married filing separately, could be excluded from income. This exception was because of the Mortgage Forgiveness Debt relief Act of 2007. Congress extended this Act through Dec. 31.
Mortgage insurance premiums deduction -- Taxpayers with adjusted gross income of $109,000 or less can currently treat qualified mortgage insurance premiums as home mortgage interest.
Personal energy property credit -- A credit subject to a $500 lifetime cap is available for qualified energy efficiency improvements and expenditures to a taxpayer's principle residence until the last day of the year.
State and local sales taxes deduction -- Many taxpayers who do not pay state income taxes can take instead the state and local sales tax deduction.
Tuition and fees deduction -- Individuals can claim an above-the-line deduction for tuition and fees for qualified higher education expenses. This deduction reduces the taxable income.
Qualified leasehold, restaurant and retail improvement property -- Qualified leasehold improvements, qualified restaurant property and qualified retail improvement are currently assigned a 15-year straight-line recovery period. However, after Dec. 31, all will be assigned a 39-year straight-line recovery period.
Section 179-deduction limit -- The current Section 179 deduction and qualifying property limits are $500,000 and $2 million respectively. After 2013, the deduction for Section 179 expensing will be $25,000 and $200,000 respectively. In addition, qualified real property will no longer be eligible for Section 179 expensing.
Special (bonus) depreciation -- The 50 percent special depreciation allowed currently for qualified property additions will only include long production-period property and certain aircrafts after Dec. 31.
All of these deductions will expire on the last day of 2013, unless they are extended by Congress before the end of the year.
Tracy Bunner is an enrolled agent and tax preparer with an office in Harrisville. She can be reached at 801-686-1995 or at firstname.lastname@example.org.