With tax reform not a priority for 2014,  Congress will start looking at expired tax breaks.

A host of tax credits and write-offs lapsed after 2013, ones effecting individuals and businesses.

Some key breaks are certain to be revived, retroactive to Jan. 1, 2014.

For individuals,

  • this includes allowing taxpayers 70½ and older to make direct distributions of up to $100,000 annually from their IRAs to charity.
  • Letting debtors exclude up to $2 million of forgiven debt on their primary homes.
  • Deductions for teachers’ class supplies, private mortgage insurance and college tuition.
  • And the election to write off state and local sales taxes instead of state income taxes.

For businesses,

  • 50% bonus depreciation, the ability to expense up to $500,000 of assets and the R&D credit.

Retirement plans get guidance on same-sex marriage from the Service:

They must recognize same-sex spouses of participants as of June 26, 2013,for purposes of applying the federal tax rules to qualified plans.

Bitcoins

  • Bitcoins are treated as property for tax purposes, according to the Service.
  • Bitcoins act as a substitute for real currency. So anyone accepting bitcoins as payment for goods or services must include in income the value in U.S. dollars.
  • Those who sell or exchange virtual currency will realize gain or loss on the transaction.
  • The profit or loss will be capital gain or loss if the bitcoins were held for investment,similar to stocks or bonds.

The IRS can go after heirs for unpaid estate taxes, a district court says.

Under federal law, the IRS can recoup the tax from what the heir receives.

IRS will be contacting firms on worker classification determinations. The IRS will target contractors vs. employee status.

Continued noncompliance by businesses will lead to audits.

The Service is doing a poor job of monitoring self-employed SEP IRA deductions,according to Treasury inspectors.

A taxpayer must have earnings from self-employment to contribute to a SEP.

The IRS plans on scrutinizing these questionable write-offs more closely.

If you would like further clarification on any of the above topics please feel free to contact  one of our tax accountants.