8 Tax Breaks Expiring at the End of 2013

From mortgage insurance premiums to teachers' classroom expenses, don't miss out on these tax breaks.

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By Susan Johnston

April 15 may seem like a long way off, but with a little planning before the end of the year, you could take advantage of tax breaks to help you lower your tax bill.

Several tax provisions are scheduled to expire at the end of this year. Many of these tax breaks have been extended in the past, so it's possible Congress could extend them again over the next few months. "It could be in very late December, at which point it's too late to do much tax planning, or January when you really can't do anything," cautions Richard Baum, a partner at accounting firm Anchin, Block & Anchin. The government shutdown could also delay the start of tax-filing season a few weeks as well.

Here's a look at eight tax breaks to consider now before they disappear.

1. Teachers' classroom expense deduction. Eligible educators who work in a school providing primary or secondary instruction can deduct up to $250 worth of unreimbursed classroom expenses. This is an above-the-line deduction, which means teachers can take this deduction before they get to adjusted gross income and regardless of whether they itemize other deductions or take the standard deduction, according to David McKelvey, a tax and business consulting partner at Friedman.

2. Exclusion of cancellation of indebtedness on principal residence. The U.S. tax code treats forgiven debts as taxable income. However, if your principle residence is foreclosed or sold in a short sale before the end of the year, this provision allows you to exclude up to $2 million of forgiven debt from your taxable income. "I'm hopeful that [this provision] gets extended because there's still a lot of foreclosures in the pipeline," says Keith Spritz, managing director of accounting firm CBIZ MHM. "If you're in that position, at least it provides an easy benefit for you to take advantage of." If your home is on the verge of a foreclosure or short sale, you may want to nudge along the process before the end of the year to ensure you're eligible for this tax break.

3. Transit benefits. In 2013, employees can spend up to $245 pretax per month on transit benefits such as rail passes, which is on par with the $245 pretax they can spend on parking. That parity is scheduled to sunset at the end of this year so that the benefit for public transportation would drop to $130 per month pretax, while higher parking benefits will remain.

4. Mortgage insurance premiums. Homeowners who have less than 20 percent equity typically pay for private mortgage insurance (also known as PMI). Those premiums were deductible in 2012 and 2013, but that provision is scheduled to expire at the end of the year. "That's an item that hurts less wealthy homeowners," McKelvey says. However, homeowners who itemize their deductions can still deduct mortgage interest.

5. IRA distributions to charity. People older than age 70½ are required to take minimum distributions from their individual retirement accounts, so this provision allows them to contribute that money to charity without counting those distributions as income. The provision can keep income low enough for an individual to qualify for other tax breaks that may have phase-out limits.

6. State and local sales tax. If you pay state or local income tax, you can deduct that amount from your federal taxes if you itemize.
But if you live in a state like Florida or Texas that doesn't have income tax, you can't take advantage of that deduction. This provision allows you to deduct state sales tax if your state doesn't have sales tax or if the amount you paid in sales tax was higher than income tax. "You can use the IRS estimate based on your income and the state you live in to calculate what would be a normal sales tax deduction, and then you can add to that certain big-ticket items like a boat," says Mark Luscombe, principal analyst for the tax and accounting group at CCH. "In a given year, even if you have an income tax, you might want to check both if you've made some major purchases."

7. Electric vehicles. Consumers who buy a qualified electric plug-in vehicle may be eligible for a tax credit of up to $7,500 depending on the size of the car's battery pack. For instance, owners of the Chevy Volt and Nissan Leaf may be eligible for a $7,500 credit, while owners of the Ford Fusion Energi and C-MAX Energi are eligible for a $3,750 credit. Some lessees may be eligible for this credit as well.

8. Remodeling your home for energy efficiency. Homeowners who remodel for energy-efficiency can take a credit of up to $500 over their lifetime. This provision has existed since 2006, so many taxpayers have already used the credit. "It looks at your prior credits that you've taken so there is a little bit of a look back, and you may not get the full amount," Spritz says. There is a separate $500 credit available for energy-efficient appliances. If you haven't used the credit yet, there's still two months left to install new windows or buy an energy-efficient washing machine.

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After reading what liberals have posted it is almost comical you liberals believe what your saying. Its not a surprise air america went bankrupt & no liberal book, if there is even one written never made #1 on the top ten list. No one wants to hear people that have opinions on everything and a clue about nothing but please continue to post your comments cause when i need a laugh I know where i can find it. TW- Thank you Veterans for your service, we are the home of the free because you are the Brave!

November 24 2013 at 2:12 AM Report abuse rate up rate down Reply

I do not know where to start.
Linda-Are you ready to move to the insane asylum? The idea that our nation is better with a system that allows more people to have assess to better health is something that Republicans at the Right Wing Heritage Foundation and liberals at the Americans for the Democratic Way have been trying to do for 50 years, since Teddy Roosevelt.
President Obama has hunted terrorists. Maybe you forgot who allowed the terrorist to kill 3000 Americans in NYC. To help you it was the guy, G W Bush, who ignored Osama Bin Ladin. The President, President Obama ordered the killing of Osama Bin Ladin and most of his underlings. We are far safer today than when President Obama took office. Police being ordered to take guns away? Maybe you own stock in a gun company. The AR-15 and other automatic weapons are being sold to any maniac, and the gun manufacturers have legal protection, so you can not sue them. All of these terrorist gun sales are making the gun companies rich.
Yourftr-The president has nominated over 100 judges. None have been rejected for any cause. Yet the minority party, who believes its job is to make sure a Black President gets nothing accomplished, has filibusted all of them.
Larry & Scottee. I am a professional Tax Accountant and do about 500 tax returns annually.
Larry- A Client retired in September 2008. He had money in a investment account. His investment account was losing over $10,000 each month and he needed the money fo his retirment. Imagine if he had put his social security in that investment, he would have to go on wealthfare and lose his home. Many of my clients, who invested in 401K plans for their retirement and to reduce their taxes, when the lost their jobs, in 2008 & 2009, had to take out this money to live and pay for their family expenses, and had to pay 50% taxes on poor investments. Larry, the people who are professional money managers have spent years learning about investments and their careers have been to manage money. Even these smart investors have losing years. They do not over react, but are confident that they can make better decisions after their down years. Social Security helps many older americans, because they know, that at least each month they will get some money and it will not fluctuate.
Scottee. Two comments on the National Sales TAx. 1) Poor and middle income people will spend less and be taxed more.
Rich people, will save more and be less taxed.
2) I represent employers who do not pay their employee taxes quarterly. Imagine if they do not submit their National Sales TAxes? I will be very rich from my fees for representing them. And Who Collects the National SAles TAx, Yup, Scottee, thepros at the IRS!

I just leave all of the t Party faithful, with my suggestion as to where to go, to not have big government and great gun availability. Somalia.
No Government & a large amount of guns and militias. Somalia
is a place for anarchists. And no government handouts.

November 24 2013 at 1:12 AM Report abuse rate up rate down Reply

If you ever want to know what duped idiots many of the American people are, just read some of these posts!

November 24 2013 at 1:06 AM Report abuse rate up rate down Reply

i want to thank (blame actually) the REPUBLICANS in congress for raising taxes for the poor and middle class by allowing these tax deductions to expire WHILE AT THE SAME TIME BEING SURE THAT THE TAX DEDUCTIIONS FOR THEIR RICH CONTRIBUTORS AND BIG OIL TO REMAIN IN THE LAWS .

We have at last defined the congress as the best government corporate bribes can buy .

November 24 2013 at 12:51 AM Report abuse +1 rate up rate down Reply

The blood *******, tax increasing, wealth distributing liberals will blame again.

November 24 2013 at 12:44 AM Report abuse rate up rate down Reply

Obama hasnt kept one promise he has made. His plans, including Obamacare, are failures.
He bows and apologizes to foreign dignitaries and then sends aid and weapons to terrorists. He sends no help for our people in Benghazi. He is letting the IRS control Obamacare. He and Reid just did away with fillibuster so they can nominate whoever they want for judicial positions AND they are working on H J Res 15...a bill to end the term limits for the President (dont believe it...Google it) Obama called private meetings with law enforcement to ask them if they will go door to door collecting guns. Why would he need to do that? I could go on and on. If you dont believe any of this..research it yourself.

November 23 2013 at 11:52 PM Report abuse rate up rate down Reply

Obama is worried about giving some 10 judges their lifetime jobs; so he doesn\'t have time for your tax breaks !?

He may get around to thinking about the tax breaks on October 1 , 2014; but then he might have to go on vacation....

November 23 2013 at 11:50 PM Report abuse -1 rate up rate down Reply

WHAT did obama tell us all? NO NEW TAXES? Well he just blew that one out of the water too. Removing tax deductions IS a tax INCREASE. Like obamacare, that is also a tax INCREASE on ALL Americans. Democrats keep picking your pockets and many of you don't even realize it.

November 23 2013 at 11:00 PM Report abuse -1 rate up rate down Reply
1 reply to misssyyoutoo's comment

You need to wake up. It is the Republicans who are wanting to take away these tax breaks. But, at the same time keep tax breaks in tack for the Billionaires and big corporations.

November 23 2013 at 11:26 PM Report abuse -1 rate up rate down Reply

And just think this is he HOPE and CHANGE peole voted for and yes I know wha HOPE and CHANGE means it means King Insane Obumer HOPES he gets all your CHANGE. The ones that voted for this nut you are getting what you deserve for all other with an IQ over 75 I hate it as bad as you do

November 23 2013 at 10:46 PM Report abuse rate up rate down Reply

This is good news. Maybe excluding these loopholes will help get us to a sensible tax system where equity rules. ALL exemptions need to be eradicated and everyone needs to pay at least something (i.e. have some skin in the game).

November 23 2013 at 10:36 PM Report abuse rate up rate down Reply