End of Year Tax Planning Tips

It’s that time of the year again; office parties, family gatherings, endless hours spent shopping locally for just the right gifts, and, of course, tax-planning. While most people keep their end of year tax planning to dropping off a bag of clothing at Goodwill, or writing one last check to their nonprofit of choice, there are regulations that phase in and out each year that you may want to keep in mind.

Tax Provisions Expiring on December 31, 2013

Teachers’ classroom expense deduction

  • As of right now, the teachers’ classroom expense deduction is set to expire at the end of 2013.
  • This is an “above the line” deduction of up to $250 for costs that teachers have incurred out of pocket for their classroom. “Above the line” means that this was taken as a reduction of gross income (income from wages, interest, dividends, businesses, etc.), so teachers were able to take it whether they itemized their deductions or took standard deductions.

Mortgage Insurance Premiums

  • When a homeowner pays less than 20% in a down payment on a home they are generally required to pay Private Mortgage Insurance, or PMI. For tax years 2012 and 2013 these payments were deductable, but the provision is expected to expire at the end of 2013.

Energy Efficiency Credit

  • Currently, homeowners who remodel their home with energy efficient property can take a lifetime credit of up to $500. The credit was first established in 2006, so many people may have already used their $500 credit, but if you haven’t consider trying to get your new windows, doors, and heating/cooling systems in before the new year.
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