8 Tax Breaks You Should Take Advantage of Now Before They Expire
With just over a month left until the deadline to file tax returns in April, this might be a good time to take a look at the tax breaks you can still take advantage of this tax season. At the end of last year, 55 tax breaks — also called tax extenders because they must be renewed each year — expired. And they will stay expired unless Congress takes action to renew them this year. Fortunately, you can still claim those "expired" tax breaks on your 2013 tax returns, so take advantage of them now before they expire for good!
1. Deduct either state or local sales taxes
You have the option of choosing to deduct either the amount you paid in state income taxes or the amount you paid in sales taxes, depending on which is bigger. Next tax season, you will only be able to deduct state income taxes you paid.
2. Employer-provided mass transit benefits
Your employer can cover up to $245 of your mass transit expenses (taking a bus, train, etc.) per month tax free. This tax subsidy will drop to $130 next tax season. The tax subsidy for parking, however, will remain at $250.
3. Above-the-line deduction of tuition and related expenses
If you paid for higher education tuition and related expenses for yourself, your spouse, or a dependent, you can claim an "above-the-line" deduction of up to $4,000. "Above-the-line" refers to a deduction you can claim even if you didn't itemize it.
4. Deduction of school-related expenses for teachers
If you are an elementary or secondary teacher, instructor, counselor, principal, or aide, you can claim a tax deduction of up to $250 for out-of-pocket school and classroom-related expenses.
5. Tax break for "underwater" homeowners
You can receive a tax break on any mortgage debt cancellation you received as an "underwater" homeowner. That means that if the bank wrote off a loan forgiveness because your mortgage was higher than your home's market value, you don't have to report or pay taxes on that write-off as an income.
6. Tax credit for energy-efficient homes and appliances
If you remodeled your home to be more energy efficient by installing qualified insulation, windows, doors, roofs, water heaters, or qualified heating or air conditioning systems, you can claim a tax credit of up to $500. The credit for solar hot water heaters, solar electric equipment, and wind turbines will not expire until 2016.
7. Tax credit for electric vehicles
You may receive up to $75,000 as a tax credit for purchasing a qualifying two- or three-wheeled plug-in electric vehicle.
8. Deduction of expenses for small business owners
If you are a small or midsize business owner, you may deduct up to $500,000 of qualifying asset purchases for your business. Next tax season, the new deductible limit will be $25,000.
View the full list of tax breaks that expired as of Dec. 31, 2013.