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Tax breaks for teachers and others getting the ax next year
Posted By Miranda Marquit On 11/21/2013 @ 2:30 pm In Taxes | No Comments
Which tax breaks have you become accustomed to? Over time, even many tax breaks that are written to be temporary from the get-go start to feel like they will be around forever. As a result, it’s often a shock when these tax breaks disappear rather abruptly. In fact, it often feels like a tax increase when these breaks expire. If you’re not paying attention for tax planning purposes, such changes can mean a large — and unexpected — tax bill.
CCH, a tax publisher, issues a yearly report on what’s ahead . Some of the tax breaks slated for expiration at the end of 2013 are those that many of us have gotten used to, including:
If you pay income tax in your state, you can enjoy a tax deduction based on what you owe. But not every state levies an income tax. In order to provide some way for residents of such states to enjoy a tax break, it’s been possible in the last few years to receive a deduction for state and local sales tax. It’s set to expire at the end of this year, though. (You can only choose one or the other; you can’t claim your state income tax and sales tax.) For those who live in states where receiving a deduction for state income tax paid isn’t an option, the loss of this tax break is likely to be quite disappointing.
When your debt is forgiven, it’s treated as income, and you have to pay federal income tax on that amount — even if you don’t have the cash in hand. However, this hasn’t been the case with mortgage debt on a principal residence for some time. The end of 2013, though, is likely to bring this tax back. If you plan to engage in a short sale, now is the time to do it.
Since 2006, it’s been possible for those subject to required minimum distributions  on their IRAs to transfer up to $100,000 to charity. This has been a helpful way for some individuals to meet their RMDs in a more tax-efficient manner. For older taxpayers who have been using this as a helpful way to manage RMDs and taxes, the bill for 2014 is likely to provide an unpleasant surprise.
Those who drive to work can receive a deduction of up to $245 a month for parking costs. However, the benefit for those using public transit (train or bus) has long been $130. During the last few years, public transit commuters received a parity benefit of $245. That comes to an end in 2013, and next year the benefit drops back to $130 a month. This is problematic for public transit commuters who have been enjoying the larger benefit. Now, it will seem like a tax increase — and a penalty for getting to work in a way that is more environmentally friendly.
Everyone knows that sometimes primary and secondary teachers buy classroom supplies out of their own pockets. In order to help teachers, a tax break was instituted. Teachers can receive an above-the-line deduction of up to $250 for unreimbursed classroom expenses. This is great, since it doesn’t require itemization to get the deduction, and many teachers, like my mom, benefit from the reduction in income. Since that deduction is set to disappear at the end of the year, it might be a good time to stock up and max out that benefit.
Certain green tax benefits  related to small-scale energy-efficiency upgrades to your home, such as insulation and windows. Many homeowners have been putting off making upgrades to their homes, sure that they can take advantage of the benefits next year. However, next year is about to arrive — without the tax break. Additionally a benefit for buying an electric vehicle is on the verge of expiration. The credit for two- and three-wheeled electric vehicles is set to end with the year, while the benefit four-wheeled vehicles disappears once certain models sell 200,000 units.
It’s true that some of these tax breaks might be extended. Things are shaping up for taxes to be the subject of an end-of-the-year fight, and some of these provisions might get new life. If you are likely to be affected by the expiration of a tax break, contact your Congressional representatives and let them know that you want to extend certain tax breaks.
(Image: Flickr user woodleywonderworks)
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 yearly report on what’s ahead: http://tax.cchgroup.com/downloads/files/pdfs/legislation/2013yearend.pdf
 required minimum distributions: http://www.bargaineering.com/articles/required-minimum-distributions-rmds.html
 green tax benefits: http://www.bargaineering.com/articles/2009-federal-energy-tax-credits.html
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