How To Make The Most Of The Latest IRS Tax Code Of 2014

Story by Jana Eschbach/CBS12

PORT ST LUCIE (CBS12) — Congress makes a last minute move to keep expired tax breaks in effect for 2014.

That means tonight, you have an entire 30 hours to act before the tax breaks expire at midnight Wednesday from the Tax Increase Prevention Act.

The Act includes a lot of the tax breaks are for small business owners and those buying last-minute personal jets.

But, if you’ve been thinking about buying a big ticket item like a car or truck–you’ve got one day to do it and get in on a big tax break.

When the President signed the Tax Increase Prevention Act a week ago, we thought it would help the average American save on taxes.

“Most of it was for businesses,” said Jeffrey Schneider, a Tax Enrollment Agent at SFS Tax and Accounting Services in Port St Lucie, “ That was the big fallacy about this whole thing. There really wasn’t a lot for the individual person.”

Schneider helps us decipher the latest turn in the tax code for the last few hours of 2014.

Schneider says if you’ve been thinking about buying a car, boat or plane–do it now. And you’ll get a tax break on top of the standard sales tax exemption.

“So if you bought a $40,000 car, and times it by 6% , that $2,400 is now deductible. Two weeks ago it wasn’t,” Schneider said.

For teachers You can deduct up to $250 for classroom supplies.
Parents with children in college, you can deduct up to $4,000 for a college or graduate degree tuition even if you don’t itemize. It will get you about $600 cash back. But you may have a better option. The American Opportunity Tax Credit could put $2500 in your pocket.

“It’s called a refundable credit. That is better than a tuition Fees deduction because the tuition and fees deduction is capped at $4,000.” Schneider said.

He recommends you talk with your tax preparer about which option is best for you.

For all the talk of extended tax breaks on energy efficient home improvements, like a new AC system, insulation or windows–all of it has to be installed and in service by Wednesday night to qualify for a tax credit.

“Nobody knew what they can and cannot do until about 8 days ago when President Obama signed it. If you didn’t do it already there’s no way they deliver it and install it tomorrow.” Schneider said.

So who does this tax law help?

Those who lost their home to foreclosure or a short sale can thank Congress. They will greatly benefit from a tax debt mortgage forgiveness, but you need to see an accountant to get the right forms and finances in order. Before the tax act, those who lost their home had to make up the difference by paying taxes on the amount lost in the sale. Now the IRS is forgiving that debt.

For a full list of 2014 Credits and deductions: http://www.irs.gov/Credits-&-Deductions

Legislation
In the past few years, there have been several laws passed that have tax implications. For more information, visit the IRS.gov pages on:
• The Affordable Care Act (ACA) Tax Provisions
• The American Recovery and Reinvestment Act of 2009 (ARRA)
• Hiring Incentives to Restore Employment (HIRE)