Many tax breaks that people have taken for granted are set to expire in 2013. A Year-End Tax Planning Special Report,published by CCH and shared by Forbes, lists 8 tax breaks you’ll want to take advantage of before the year’s end.
- Energy-efficiency home remodel. You can get up to a $500 tax credit for making certain energy-efficient improvements to your home, such as installing an energy-saving front door, adding insulation, or putting in a corn stove. You receive a tax credit of 10% of the cost of building materials, up to $500 in credit. One thing you’ll need to note: the $500 credit applies to cumulative claims for the credit dating back to 2006.
- An electric vehicle purchase. A tax credit is available for 2- or 3-wheeled electric vehicles, as well as a separate tax credit of $7,500 for 4-wheeled electric vehicles, including the 2012-2014 Ford Focus Electric, the 2013 Ford Fusion Energi, the 2013 Ford C Max Energi and the 2011-2012 Nissan Leaf.
- The transit parity tax break. Train commuters can defer $245 a month of pretax salary to use for commuting expenses. If you commute by train and your employer offers the benefit, make sure you’re taking advantage of it for the rest of the year. If Congress decides to extend the break in 2014 retroactively, you may be able to get money back if you go ahead and sign up again for 2014.
- A conservation property donation. If you donate property or an easement to a conservation organization, you’ll receive an enhanced tax break, even if your income is modest.
- Charitable contributions from your IRA. You’re allowed to transfer up to $100,000 of your IRA account to charity, if you’re 70.5 or older.
- State and local sales tax. This tax break is likely to be renewed because it’s so politically-motivated, but you’ll want to take advantage of it now if you can. If you’re a taxpayer who deducts state and local sales tax (in lieu of state and local income tax), you may want to go ahead and make any large purchases you’re considering.
- Teachers’ classroom expenses. Many school teachers buy school supplies out of their own pockets, and they currently get up to $250 for unreimbursed expenses. If you’re a teacher in this category, you will want to stock up on classroom supplies for the whole school year before year-end.
- Exclusion of cancellation of indebtedness on principal residence. If you are dealing with debt modification or facing a short sale or foreclosure, you can currently exclude cancellation of mortgage debt of up to $2 million from your income.
Although it’s possible that some of these tax breaks could be renewed, I don’t advise depending on it. If you’re able to make use of these for 2013, claim them while you can.
If you have questions about if you’re eligible or how any of the tax breaks work, give me a call at (864) 836-3136.