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55 tax breaks expire at the end of the year, and how it affects you

Updated: Tuesday, December 31 2013, 05:40 PM CST
Reported by Chris Papst:

The end of the year marks an end to many tax breaks, meaning you may have to pay more in 2014. 

According to the non-partisan group Joint Committee on Taxation, 55 tax breaks are expiring Wednesday night at midnight.  But that’s not all.  You’ll be paying more in 2014 in other ways, too.

In just about six hours, 55 temporary tax breaks are expiring affecting many of us. 

Teachers who buy school supplies for their students may want to buy them now.  The deduction that allows teachers to write off up to $250 worth of supplies is going away.

If you’re a homeowner who is looking to make your house more energy efficient, you’ll no longer receive a 10% tax break on building material such as insulation or a new water heater. 

Small business owners are some of the most affected; a deduction of up to $500,000 for certain types of income has been reduced to $25,000.  And the 100 percent tax exemption on small business investments drops to 50 percent.

Want an electric car?  Buy it before midnight, because the $7,500 tax credit for buying such a vehicle will be gone.

If you donate property for easements or conservation, that will no longer be deductible.

A $4,000 deduction for parents or students paying for college will be eliminated.

Thousands of Central Pennsylvanians commute to work, but their deduction of up to $245 a month will be cut back to $130. 

Plus, if you like to drive on the Turnpike, you’ll need to fork up more in 2014 as tolls are going up this weekend.  EZ-Pass users will pay two percent more while cash customers will see a 12 percent increase. 

These tax breaks are usually renewed.  But with Washington on vacation until January, there is no chance that will happen before they expire.   If you would like to see the entire list of the expiring tax breaks, keep reading.

WASHINGTON (CBS/AP)--In an almost annual ritual, Congress is letting a package of 55 popular tax breaks expire at the end of the year, creating uncertainty - once again - for millions of individuals and businesses.

Lawmakers let these tax breaks lapse almost every year, even though they save businesses and individuals billions of dollars. And almost every year, Congress eventually renews them, retroactively, so taxpayers can claim them by the time they file their tax returns.

No harm, no foul, right? After all, taxpayers filing returns in the spring won't be hurt because the tax breaks were in effect for 2013. Taxpayers won't be hit until 2015, when they file tax returns for next year.

Not so far. Trade groups and tax experts complain that Congress is making it impossible for businesses and individuals to plan for the future. What if lawmakers don't renew the tax break you depend on? Or what if they change it and you're no longer eligible?

"It's a totally ridiculous way to run our tax system," said Rachelle Bernstein, vice president and tax counsel for the National Retail Federation. "It's impossible to plan when every year this happens, but yet business has gotten used to that."

Some of these expiring tax provisions are not likely to affect you    - like the reduction in rum excise taxes to Puerto Rico and the Virgin Islands.

But others, well, they might end up costing you. You need to know what tax breaks go away next year, so you can do some planning now to reap some of the savings while there is still time left to do it.

Here are some of the big ones:

A tax credit for research and development, benefiting a wide range of industries, including manufacturers, pharmaceutical makers and high tech companies. The tax break saved companies an estimated $6.2 billion in 2013.

An exemption that allows banks, insurance companies and other financial firms to shield foreign profits from being taxed by the U.S. The tax break is important to major multinational banks and financial firms, saving them an estimated $9.4 billion in 2013.

A tax break that allows profitable companies to write off large capital expenditures immediately rather than over time giving some companies huge tax shelters. The tax break, known as bonus depreciation, benefits automakers, utilities and heavy equipment makers. Tax break: $34 billion in 2013, though companies lose future savings because they would have already written off the cost of items.

A tax credit for producing renewable energy, including wind and solar, in plants built before the end of 2013. Tax break: $116 million in 2013, though the savings would grow over time, saving companies more than $12 billion over the next decade as the plants continue to produce energy.
A provision that allows restaurants and retail stores to more quickly write off the cost of improvements. Tax break: $277 million in 2013.
Increased tax rebates to Puerto Rico and the Virgin Islands from a tax on rum imported into the United States. The U.S. imposes a $13.50 per proof-gallon tax on imported rum, and sends most of the proceeds to the two U.S. territories. Cost: $199 million in 2013.

A 50 percent tax credit for expenses related to railroad track maintenance through 2013. Tax break: $232 million in 2013.

A provision that allows motorsport race tracks to more quickly write off improvement costs. Tax break: $46 million in 2013.
Enhanced deductions for companies that donate food to the needy, books to public schools or computers to public libraries. Tax break: $218 million in 2013.

A tax break that allows TV and movie productions to more quickly write off expenses. Sexually explicit productions are ineligible. Tax break: $266 million in 2013.

A tax credit of up to $2,500 for buying electric-powered vehicles was expanded to include electric-powered motorcycles. Golf carts, however, were excluded. Tax break: $1 million in 2013.

Source:  Joint Committee on Taxation/ CBS55 tax breaks expire at the end of the year, and how it affects you

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