Tax time is fast approaching and with it, regulation changes, annual updates, and tax break reevaluations. Though you may be prepped and ready for filing this year’s taxes, changes to the rules in 2014 will affect next year’s tax return and could leave you feeling stressed. So what’s on the chopping block? Dozens of tax breaks.
The 2013 tax year will be the final opportunity for qualifying individuals to take advantage of several specific tax breaks and deductions. Though some of these breaks are set to disappear entirely, others will be modified or reduced without a vote from Congress to save them.
Some of the tax breaks that will be struck from future tax returns include:
- a tax break for tuition costs
- another rewarding green home updates
- and even a tax break reimbursing for some out-of-pocket expenses for teachers.
While it’s expected that tax breaks aren’t exactly created to endure the test of time, it’s still a blow for anyone who has taken advantage of these helpful financial boosts. It’s especially concerning to anyone who depends on money from their tax returns as a way to supplement their annual budget.
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What this means for you
Fortunately, the majority of people meeting the qualifications for the 2013 tax year will still benefit from these tax breaks. It’s the future that’s a bit more uncertain. Unless Congress votes to keep these taxpayer benefits in place, these special tax breaks will vanish.
As mentioned briefly above, some of the tax breaks to disappear are ones many people utilize. For instance, The Tuition and Fees Deduction allows up to $4,000 of expenses related to higher education (including tuition) to be claimed and deducted. The Educator Expense Deduction returns up to $250 for a teacher’s out of pocket expenses related to the classroom. And The Non-Business Energy Property Credit returns 10% of energy costs after you’ve made efforts to reduce energy usage in your home (updated insulation, qualifying air conditioning units, etc.)
For a more detailed list of some of tax breaks that will be most missed, check out CNN Money’s article highlighting 8 Disappearing Tax Breaks. While there are more than 8 tax breaks up for elimination, these are some of the most common and likely to be missed.
The disappearance of these tax breaks is an excellent opportunity to assess just how much you depend on your tax return each year. Though these returns can provide much needed (and planned for) relief, it can be dangerous to count on the annual payback if your financial security depends on it. If you’re able to create a budget that works independently from money made on a return, you won’t leave yourself vulnerable should unexpected circumstances arise. By the same token, if you adjust your tax withholding accordingly you can take complete control of your finances – no surprises and no guessing.
We’ll be be keeping tax time in mind in the future months – let us know if you have any tips, tricks, or info you’d like to share!
Image Credit: 401(k) 2013