- Days left

Going, Going ... Many Key Tax Deductions Set to Expire

Studio shot of tax form, close-up
Getty Images
Ready for year-end tax planning? In between holiday parties and last-minute shopping, it's worth making sure that you are minimizing your 2013 tax bill.

It's almost always wise to maximize your deductions, prune losers from your portfolio and fill your retirement accounts as much as the rules allow.

But this year is also your last chance to use a large number of tax breaks that are scheduled to expire. According to the American Institute of Certified Public Accountants, dozens of these provisions are about to go away.

"The extender provisions that have gone out are the one thing I would tell mainstream taxpayers to watch out for," said Mark Steber, chief tax officer at Jackson Hewitt. "Every one of those touches somebody down the line."

Among the more popular disappearing breaks is the deduction for tuition and fees. Until the end of the year, couples with less than $160,000 in adjusted gross income can take a deduction if they are paying qualified higher education expenses for a dependent. The deduction, which can reach $4,000 for those with income below $130,000, will be gone in 2014.

"That's a huge amount for lower-income people," said Cathy Curtis, owner of Curtis Financial Planning in Oakland, Calif.

Teachers will lose out because of the expiration of a provision that lets them deduct up to $250 of their spending on classroom supplies.
The National Education Association estimates that teachers spend an average of $400 annually on supplies.

Homeowners who have had loans modified or forgiven in the past year do not have to include that amount as income, but they will next year. Some 181,000 loan modifications were completed in the third quarter alone, according to Hope Now.

Then there's the provision that lets people 70½ give up to $100,000 of an IRA distribution to charity, thereby avoiding income taxes. The so-called qualified charitable distribution, popular with both retirees and charities, is scheduled to expire at the end of this month.

"If they don't extend it, that's going to affect quite a few retired folks who are sheltering themselves from income tax," Curtis said.

The ability to itemize and deduct sales taxes from the federal return is also expiring, impacting people living in states without income taxes or those who have made major purchases this year.

"If you are planning on making a lot of big purchases, you might want to go ahead," Curtis said, provided you are not deducting state income tax on your federal return. The IRS requires that you choose which to deduct.

Many deductions that are expiring, such as the credit for purchasers of electric cars, affect fewer people.

Many business tax breaks will also end.

Small businesses will feel the pain when the amount they can deduct for qualified equipment drops from a maximum of $500,000 this year to $25,000 in 2014.

Disappearing tax breaks aren't the only thing to watch out for. This could be a big year for capital gains in mutual funds, as many have run through the losses they were carrying over from the financial crisis.

This year brings some new taxes on wealthy households, notably a 3.8 percent Medicare surtax on income above $250,000 for a married couple filing jointly. The surcharge is applied to the lesser of investment income or modified adjusted gross income above that amount. There is also an additional 0.9 percent Medicare tax for people above the same income thresholds, applied to wages and other compensation subject to the existing Medicare tax.

Combine the new taxes on high earners with a hike in the maximum tax rate to 39.6 percent for couples with income over $450,000, and 2013 might be a costly tax year.

Steber recommended being careful to make all your normal tax-planning moves.

"Sell those loss stocks; consider your final charitable deductions," he said, adding that you should always make sure to maximize contributions to your IRA or 401(k).

Follow those suggestions and you may have something left over for next year's holiday season.

More from CNBC:

Increase your money and finance knowledge from home

Goal Setting

Want to succeed? Then you need goals!

View Course »

Banking Services 101

Understand your bank's services, and how to get the most from them

View Course »

TurboTax Articles

Cities with the Lowest Tax Rates

The total amount of tax you pay reaches far beyond what you owe the federal government. Depending on where you live, most likely you're required to pay additional taxes, including property and sales tax. The disparity between the amount of tax you pay in a low-tax city and that in a high-tax city can be dramatic. Living in any of these 10 cities could save you a bundle, although the exact amount may fluctuate based on your income and lifestyle choices.

Cities with the Highest Tax Rates

Much ado is made in the press about federal tax brackets, but cities can carry a tax bite of their own. Even if you live in a state that has no income tax, your city may levy a variety of taxes that could eat away the entire benefit of living in an income tax-free state, including property taxes, sales taxes and auto taxes. Consider all the costs before you move to one of these cities, and understand that rates may change based on your family's income level.

Great Ways to Get Charitable Tax Deductions

Generally, when you give money to a charity, you can use the amount of that donation as a deduction on your tax return. However, not all charities qualify as tax-deductible organizations. While there are many types of charities, they must all meet certain criteria to be classified by the IRS as tax-deductible organizations. There are legitimate tax-deductible organizations in many popular categories, such as those listed below.

A Freelancer's Guide to Taxes

Freelancing certainly has its benefits, but it can result in a few complications come tax time. The Internal Revenue Service considers freelancers to be self-employed, so if you earn income as a freelancer you must file your taxes as a business owner. While you can take additional deductions if you are self-employed, you'll also face additional taxes in the form of the self-employment tax. Here are things to consider as a freelancer when filing your taxes.

Tax Deductions for Voluntary Interest Payments on Student Loans

Most taxpayers who pay interest on student loans can take a tax deduction for the expense ? and you can do this regardless of whether you itemize tax deductions on your return. The rules for claiming the deduction are the same whether the interest payments were required or voluntary.

Add a Comment

*0 / 3000 Character Maximum


Filter by:
Mc Peace-k

dont waste you time , this is the solution : http://iam-searching-for.blogspot.com/2013/12/if-you-want-to-get-some-extra-cash-money.html

December 25 2013 at 2:38 PM Report abuse rate up rate down Reply
Roberta Rosenfeld

$130,000 is low income?

December 12 2013 at 11:35 PM Report abuse rate up rate down Reply

Fat chance of them ever getting renewed the Obamacare tax credit and subsidy has to be made up for somewhere. And President Obama swore taxes would not increase on his watch.

December 12 2013 at 4:23 PM Report abuse rate up rate down Reply

peaple remember when gas was at 1.78 gal. just before Obama took office first term since then he never made on efort to bring oil down, that is one of the things thats keeping the pricing on goods up, why the main stram media is confronting the president on this topick.remember every time airforce one is used it cost us tax payers over 650,000.00 dollars plus security ext,ext .

December 12 2013 at 1:15 PM Report abuse -3 rate up rate down Reply
1 reply to dad's comment

Sorry, the other items you mention are likely true also, BUT, the prices increasing is more due to inflation, (i.e. devaluation) of the US dollars.

The FED and the government have let the value of the dollar "float". Yes, that is their term. The dollar used to be tied to silver, and gold before that. and coins themselves carried their actual value in precious metals - no longer. (Look at the old US paper money that WAS silver certificates, and gold certificates before silver; now they are federal reserve notes, and even pennies are too cheap to be made from copper!) Since then, it has been altogether too easy to just print more money, and add some zeroes to computer numbers for budgets and government bonds.

Sure most people are happier with bigger numbers on their paychecks, but what matters is what you can buy with those numbers, and pretty much, most people can buy less and less than they could just ten, twenty, thirty years ago with their paychecks.

December 12 2013 at 5:52 PM Report abuse +1 rate up rate down Reply

I like being an Independent Capitalist.
I earn it and I keep it - period.
Did you ever notice how government is great at spending YOUR money?
Government knows best - Ask any Liberal.

December 12 2013 at 11:30 AM Report abuse -5 rate up rate down Reply


In what way is the party of plutocracy benefiting the average American??????
Without the rich or corporations nobody would have jobs not even the middle class and the poor are certainly not in a position to help anyone when they can't even help themselves.
What needs to be trimmed to the bones are the opportunists who collect having no intention to ever take care of themselves, the foreign aid and we need to return to teaching our kids responsibilities so that in the future they themselves have a chance to become prosperous.

December 12 2013 at 10:30 AM Report abuse -6 rate up rate down Reply
1 reply to Mickylitz's comment

Middle class business owners probably create more jobs than rich businessmen do. Most businesses are owned by the middle class.

December 12 2013 at 11:33 AM Report abuse +4 rate up rate down Reply

how do they expect you to live when someone takes money from your company and you end up filing bankruptcy now you work parttime because you cant get a good job anymore. living on social security and parttime job isnt easy we are trying very hard though everything just keeps getting higher

December 12 2013 at 10:28 AM Report abuse +2 rate up rate down Reply

Thank You again, Mr. OBAMA......I don't call him PRESIDENT

December 12 2013 at 9:21 AM Report abuse -7 rate up rate down Reply
1 reply to nflamingo's comment

nflamingo ...

Why should you ?
A true president should look out for our country,he seem to be more interested a making America behave like the other " S " holes of the world.

December 12 2013 at 9:27 AM Report abuse -4 rate up rate down Reply

It's always more taxes and more taxes but never less spending .

December 12 2013 at 9:08 AM Report abuse +2 rate up rate down Reply
1 reply to Mickylitz's comment

Did you forget about the sequester?

December 12 2013 at 11:36 AM Report abuse +4 rate up rate down Reply
1 reply to hinlois1's comment

Yeah, and they still want more taxes!

December 12 2013 at 11:57 AM Report abuse -1 rate up rate down

Hey, the politicians need the money to spend on their glorious plans, to maintain their power positions and to support their benefactors/people/corporations.

December 12 2013 at 8:27 AM Report abuse +4 rate up rate down Reply
1 reply to kcanpa2_kenneth's comment

Your comment makes me think that we ALL, including you, should make changes when we vote in 2014. We control their 'power positions', but only if we remove the ones who are taking advantage of the situation!

December 12 2013 at 2:07 PM Report abuse +2 rate up rate down Reply