Most of the legislative action in Washington has been focused on health and financial reforms. But a major catch-all bill dealing with tax issues is expected to be enacted this week. Sporting the catchy title of the American Jobs and Closing Tax Loopholes Act, the bill provides one-year extensions to a number of tax rules that expired at the end of last year. The extenders are retroactive to the beginning of 2010. Numerous provisions apply directly to businesses and could have indirect benefits for consumers by lowering product costs. For example, builders and contractors will continue to enjoy a range of tax credits for energy-efficient homes.
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Here are the more notable tax extensions, provided in an analysis of the bill from tax publisher CCH:
Property Taxes. The additional standard deduction on real property taxes --$500 for individual filers and $1,000 for couples -- has been extended. It's for use by people who don't itemize their tax deductions.
Sales Taxes. Consumers have had the choice of taking an itemized deduction on their state and local income taxes or their state and local general sales taxes. The sales tax choice expired at the end of last year but is extended in the bill.
Higher Education Deduction. Up to $4,000 of qualified higher-education tuition and related expenses could be taken as above-the-line deductions. There are income limits on who may take the deduction and it's not available if the expenses are deductible under any other tax program.
Teacher Classroom Supplies Deduction. Up to $250 in out-of-pocket spending on qualifying classroom supplies may be taken as an above-the-line deduction. CCH notes that teachers who itemize their taxes might be able to deduct qualifying expenses that exceed $250 by classifying them as employment-related miscellaneous itemized deductions. The total of all such miscellaneous deductions would only result in reducing taxable incomes if it exceeded 2 percent of adjusted gross income.
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IRA Charitable Contributions. The bill would restore the ability of people older than 70 1/2 to distribute up to $100,000 from their IRAs to charitable organizations without the money being recognized as income or being subject to itemization rules that have size limits on tax-favored contributions. CCH says the measure does not apply to SEP or SIMPLE IRAs or, in certain circumstances, to inherited IRAs.
Donated Land. People may continue to receive tax deductions for land donations to designated property conservation organizations.
Hybrid Vehicles. An alternative motor vehicle credit will continue to be available for hybrid vehicles that use gasoline and electricity. Separate credits are available for autos and light trucks, and for medium and heavy trucks.
Alternative Fuels. A number of tax credits were extended for biodiesel and renewable diesel fuel.
Energy-Efficient Windows. CCH says the measure modifies the terms of the tax credits for energy-efficient windows to reflect regional climate differences.
Disaster Relief. A number of programs will be extended to help taxpayers affected by federally declared disasters, including higher allowable loss limits for deductions and a five-year carryback provision for net operating losses.
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