Some energy tax credits, along with deductions for college expenses and charitable giving, are among dozens of tax breaks that expired at the end of 2013 and will not be reinstated unless Congress takes action.

The Joint Committee on Taxation reports that 55 temporary tax provisions, also known as “tax extenders” because they are often renewed each year, expired as of January 1, 2014.

The expired provisions include:

  • Federal tax deductions for individuals for state and local sales taxes, qualified tuition and related college expenses, and mortgage insurance premiums.
  • Tax credits for businesses conducting research and development.
  • Tax-free distributions for IRA owners over the age of 70½ if proceeds are directed to a qualified charity.

Many of these provisions had been extended several times. Earlier this year, the American Taxpayer Relief Act made permanent some elements of the tax code, such as exemption levels for estate and gift tax, while other provisions were temporarily extended through the end of 2013.

Will the tax provisions be reinstated?
The Tax Extenders Act of 2013 was introduced in the Senate on December 20, 2013, to retain the provisions, but did not pass Congress before its end-of-the-year recess.

Congress could act on this bill in 2014, making the tax breaks retroactive. That discussion, however, would take place within the current debt debate. The Center on Budget and Policy Priorities estimated the tax extenders collectively cost about $50 billion per year in revenue to the government.

The uncertain future for the tax extenders is an important topic for clients. Advisors may want to discuss how the expiration of these provisions may affect clients’ overall tax strategy for the coming year, and ensure that they take advantage of the provisions available to them in their 2013 tax filing.