Now that summer is officially over and the fall season has arrived, most of us are looking ahead to cooler weather, the holiday season and spending time with family. But there's one thing many of us may not be thinking about but should be: taxes.
Last December, more than 50 temporary tax laws, known as "tax extenders," expired. These "extenders" are essentially tax incentives for individuals and businesses. They range from big to small stuff such as tax breaks for schoolteachers who buy supplies or tax breaks for college students and parents who pay for tuition. Are you a homeowner? Well there are also tax breaks for those who make their home more energy efficient on the table.
In what's become an almost annual event, Congress is expected to vote on these tax extenders before the end of this year. The tax extenders are expected to be either temporarily extended or permanently passed, which will help keep more money in your pocket come tax time.
Here is a short list of some of the tax extenders that are on the table for passage and for you to keep an eye on:
- Mortgage Debt Relief: If extended, amounts forgiven or discharged when your principal residence is foreclosed on, sold in a short sale, or your loan is modified will not be included in your income.
- The Educator Expense Deduction: If you are a teacher, this tax law will allow you to claim up to $250 of classroom expenses for supplies, materials, books and software.
- Tuition and Fees Deduction: College students or parents may be able to deduct up to $4,000 in education expenses related to schooling, including tuition, books, and other supplies under this law.
- Energy Tax Breaks: Homeowners who make energy efficient improvements to their homes that meet certain Energy Star guidelines are able to claim the Non-Business Energy Property Credit, which could mean as much as $500.
- State and Local Sales Tax Deduction: Under this law, you have the option to choose between deducting state and local income tax or state and local sales tax. This is especially beneficial for people who live in a state like Texas or Florida that doesn't collect state income tax, or if you made large purchases and paid substantial local sales tax.
While it's uncertain when Congress will vote on these extenders, it is expected to be sometime after the midterm elections when the legislative session resumes. But rest assure, you can check the TurboTax blog to find out the latest update regarding the passage of the tax extenders.