Tax Credits and Deductions Expiring in 2013

Tax credits and deductions have become an important part of the tax code and a significant benefit to many tax payers. Some credits, like the investment credit for business in American Samoa, are rarely used. But others are used by a majority of taxpayers. And 2013 marks an important year because 55 tax credits and deductions will expire at the end of the year unless extended by congress according to the Joint Commission on Taxation. Here’s a list of the ones that may hit close to home:

  1. Discharge of indebtedness on principal residence excluded from gross income of individuals (sec. 108(a)(1)(E)).
  2. Premiums for mortgage insurance deductible as interest that is qualified residence interest (sec. 163(h)(3))
  3. Deduction for State and local general sales taxes (sec. 164(b)(5))
  4. Deduction for qualified tuition and related expenses (sec. 222(e))
  5. Deduction for certain expenses of elementary and secondary school teachers (sec. 62(a)(2)(D)).
  6. Allowance for deducting depreciable property as expense under Section 179 (secs. 179(b)(1) and (2) and 179(f))
  7. Tax-free distributions from individual retirement plans for charitable purposes (sec. 408(d)(8))
  8. Special rules for qualified small business stock (sec. 1202(a)(4))
  9. Incentives for alternative fuel and alternative fuel mixtures (other than liquefied hydrogen) (secs. 6426(d)(5), 6426(e)(3) and 6427(e)(6)(C))
  10. Basis adjustment to stock of S corporations making charitable contributions of property (sec. 1367(a)(2)) and reduction in S corporation recognition period for built-in gains tax (sec. 1374(d)(7))

Some of these could have a substantial impact on your tax bill for 2013. It’s likely that Congress will at least discuss these items but it’s looking like we’ll have yet another last minute resolution of tax issues. And the jury’s still out as to whether or not any of these provisions will be extended. Best bet is to get with your tax advisor now to evaluate how these issues could impact your taxes and establish a strategy with contingencies if these do impact you.

Schedule your FREE tax consultation today by calling (480) 888-7111 or submitting a web request here.