Business owners aren’t the only ones facing uncertainty about expired tax breaks. Here are the most popular tax breaks for individual taxpayers that expired at the end of 2013:
Higher Education Tuition Deduction. In 2013, you could deduct up to $4,000 (or up to $2,000 for higher income folks) for qualifying higher education tuition and related fees paid for you, your spouse or your dependents.
Option to Deduct State and Local Sales Taxes. In 2013, individuals had the option of claiming an itemized deduction for general state and local sales taxes instead of claiming an itemized deduction for state and local income taxes. This option was beneficial for taxpayers who live in states with no personal income taxes and taxpayers who pay only minimal state income taxes.
Charitable Donations from IRAs. IRA owners who had reached age 70 1/2 by Dec. 31, 2013, were allowed to make charitable donations of up to $100,000 directly out of their IRAs in 2013. The donations counted as IRA required minimum distributions.
So, charitably inclined seniors who had more IRA funds than needed could reduce taxes by arranging for tax-free IRA donations to take the place of taxable required minimum distributions in 2013.
Tax-Free Treatment for Forgiven Principal Residence Mortgage Debt. For federal income tax purposes, canceled debts generally count as taxable cancellation of debt (COD) income. However, a temporary exception applied to COD income from canceled mortgage debt that was used to acquire a principal residence. Under the temporary provision, up to $2 million of COD income from principal residence acquisition debt that was canceled between 2007 and 2013 was treated as a tax-free item for federal income tax purposes.
Energy-Efficient Home Improvement Credit. For 2013, taxpayers could claim a tax credit of up to $500 for certain energy-saving improvements to a principal residence. The $500 cap must be reduced by any credits claimed in earlier years.
Salary Reduction for Transit Passes. Your employer may allow you to sign up to reduce your taxable salary to pay for mass transit passes to commute to and from work. In 2013, the maximum monthly amount you could set aside on a tax-free basis was $245. The maximum monthly amount for 2014 will be only $130 unless Congress decides to allow a larger amount. (If that happens, the larger amount would likely be $250.)
Deduction for Teachers’ School Expenses. For 2013, teachers and other personnel at K-12 schools could deduct up to $250 of school-related expenses they paid out of their own pockets, regardless of whether they itemized or not