Are the expired tax breaks safe for 2014?
Yes. All of the key provisions that lapsed after 2013 will be revived retroactively to Jan. 1, including the election to write off state sales taxes in lieu of income taxes, the $2-million exclusion
of forgiven debt on a primary home, the $500,000 cap on expensing business assets and the ability of folks age 70½ and older to transfer up to $100,000 from their IRAs directly to charity.
This last easing, if not revived, has implications for the 3.8% Medicare surtax on net investment income. Although the payout wouldn’t be subject to the surtax, it would cause the donor’s adjusted gross income to go up, which has the potential to trigger or increase the donor’s liability for the surtax on other investment income. When will lawmakers reinstate the provisions ? After the Nov. elections , most likely.
Although the Senate is currently on track to hold a vote next week to restore nearly all of the breaks, the House is proceeding at a more deliberate pace. This past week, it approved legislation to permanently extend the R&D tax credit and will take up individual bills to extend other business tax breaks. As a result, the likely scenario is that a final agreement won’t be reached until late in the year