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Recent Posts:Five (5) Tax Breaks That Expired Last Year
Many tax provisions were made permanent with the passage of the PATH Act in late 2015, but more than 36 others expired at the end of 2016. Here are the five that are most likely to affect taxpayers like you.
Five (5) Tax Breaks That Expired Last Year
1. Qualified Tuition and Expenses:
The deduction for qualified tuition and fees, extended through 2016, is an above-the-line tax deduction, which means that you don't have to itemize your deductions to claim the expense. Taxpayers with income of up to $65,000 (single) or $130,000 (joint) can claim a the deduction for up to $4,000 in expenses. Taxpayers with income over $65,000 but under $80,000 (single) or over $130,000 but under $160,000 (joint) can take a deduction up to $2,000. If you are a taxpayers with income over those amounts, you are not eligible for the deduction.
Qualified education expenses are defined as tuition and related expenses required for enrollment or attendance at an eligible educational institution. Related expenses include expenses for books and other supplies, student-activity fees equipment as required by the institution.
2. Exclusion of Discharge of Principal Residence Indebtedness:Typically, forgiven debt is considered taxable income in the eyes of the IRS; however, this tax provision was extended through 2016, allowing homeowners whose homes have been foreclosed on or subjected to short sale to exclude up to $2 million of canceled mortgage debt. Also included are the taxpayers seeking debt modification on their home. 3. Exemption from Increase in Medical Expense Threshold Amounts:
Starting in '13, threshold amounts for medical expense deductions increased from 7 and 1/2 percent to 10 percent of Adjusted Gross Income (AGI). Seniors (age 65 during or before the tax year) were temporarily exempt from the 10 percent threshold of AGI, which applied to tax years starting after December 31, 2012 and and ending before January 1, 2017.
4.Mortgage Insurance Premiums:Mortgage insurance premiums (PMI) are paid by homeowners with less than 20% equity in their homes. These premiums were deductible in tax years 2013 through 2016. Mortgage interest deductions for itemized taxpayers are not impacted.
5. Energy Efficient Improvements:While this tax break has been around for some years, if you improved your home's more energy efficiency in 2016, now is your chance to take advantage of this tax credit on your 2016 return. The credit reduces your taxes as opposed to a deduction that reduces your taxable income and is equal to 10 percent of the cost of building materials for items such as geothermal heat pumps, a wood pellet stove, insulation, or a new water heater*.
*Note: This tax is cumulative, so if you've taken the credit in any tax year since 2006, you will not be able to take the full tax credit this year. The total tax credit is $500, so if you took a credit of $300 in 2015, the maximum credit you could take this year is $200.
Don't miss out on your entited tax breaks. Let Brandt & Associates file your State and Federal Taxes.
If you're wondering whether you should be taking advantage of these and other tax credits and deductions, please contact us now for your Free Consultation.. 02/15/2017
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