Monday, November 4, 2013


The IRS has released many of the inflation-adjusted numbers for deductions, credits, phase-outs, and rates that will be in effect for tax year 2014.

I listed many of these changes in "What's New for Federal Income Taxes for 2014" at 

Here are some more 2014 numbers –

 The Adjusted Gross Income (AGI) phase-out range for the Lifetime Learning Credit is $54,000 to $64,000 for all unmarried filers, and $108,000 to $128,000 for married couples filing a joint return.  This credit is not available on separate returns.

 The AGI phase-out range for the student loan interest deduction is $65,000 to $80,000 for all unmarried filers, and $130,000 to $160,000 for married couples filing a joint return.  The credit is not available on separate returns.  The maximum deduction remains at $2,500.

 The AGI limit for the Retirement Savings Contribution Credit is $30,000 for Single, Married Filing Separate and Qualifying Widow(er) filers, $45,000 for Head of Household, and $60,000 for Married Filing Joint.

 Individuals and couples cannot claim an Earned Income Credit if the total investment income reported on the 2014 Form 1040 exceeds $3,350.  Investment income includes taxable, and tax-exempt, interest and dividends, rent and royalty income, capital gain net income, and net passive activity income.

The foreign earned income exclusion is $99,200.

• And, for those who are interested, the tax “on the first sale by the manufacturer, producer, or importer of any shaft of a type used in the manufacture of certain arrows is $0.48 per shaft”.

There is no word whether the idiots in Congress will extend the various tax benefits that are scheduled to expire on 12/31/2013, which include –

   the $250 above-the-line deduction for qualified expenses of K-12 educators;

 the above-the-line deduction for up to $2,000 or $4,000 of qualified tuition and fees;

 the itemized deduction for mortgage insurance premiums;

 the option to claim an itemized deduction for state and local general sales taxes instead of state and local income taxes;

 the $500 lifetime maximum credit for qualified energy efficient improvements to a taxpayer's principal residence;

 the ability to make a direct tax-free transfer from an IRA to a charity and apply this as a Required Minimum Distribution; and

 the exclusion from income of the discharge of qualified principal residence debt.

It is possible that the idiots in Congress will, as usual, extend some or all of these expiring breaks for another year as part of the budget process.  But, again as usual, we will not know until the very last minute.

I wish the idiots in Washington would finally decide to either make permanent the deserving among the “tax extenders”, as they did with the “Bush tax cuts”, or let them all expire for good.  What sense is there in temporarily extending these tax breaks year after year?  But then who said these idiots had any sense?

Of course all the 2014 numbers I have discussed here and at the Tax Center assume current tax law does not change.  Dave and Max (Camp and Baucus) have been touting tax reform all year, promising to enact substantive reform legislation before the end of 2013, but have actually done nothing of consequence to bring about the promised reform.  To be perfectly honest, it is too late now to do anything.

I expect that there will be some token tax changes, probably adding more complexity to the Code, included with extending the expired breaks in the final last minute budget bill.

But, sadly, there will be no tax reform in 2013.  Or, again sadly, not in 2014 either.


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