The last-minute shuffle in Congress to renew more than 50 tax provisions collectively dubbed the “tax extenders” is keeping everybody on their toes — especially CPAs such as Kevin Sickels of Ketel Thorstenson’s Rapid City office.
The U.S. House of Representatives recently passed a bill that would renew the tax extenders, which expired Dec. 31, 2013 — until Dec. 31, 2014. The Senate followed suit on Tuesday.
Although some of the provisions don’t apply to a taxpayer or business owner in the Black Hills or in western North Dakota — unless you have foreign investments or income from products made in Puerto Rico — there are things that will have an impact on us.
Sickels noted that one provision, allowing taxpayers to deduct state and local sales tax, will help South Dakotans specifically. South Dakota is one of just a handful of states that don’t have an income tax, which already is deductible.
Also, if you pay mortgage insurance on your home loan, you will be able to deduct that expense. Business owners who employ Native Americans on an Indian reservation, teachers who pay for continuing education and people who want to give money from their individual retirement accounts to a charity will also benefit from the tax extenders.
And business owners who invest in new capital assets will now be able to write off half of that investment in the first year. Also renewed is Section 179 expensing which allows for the write off of short lived capital assets, up to $500,000 in the year of purchase. That’s a big one, Sickels said.
Sickels and other accountants were hoping that some of the tax provisions would be made permanent or at least extended beyond 2014. But as it is, Congress will have to take up the issue again in the spring.
And no matter what, the late-passed extenders will likely cause delays in tax filing for 2014, he said. The accounting software makers will have to incorporate the new provisions into their tax forms, and then submit the new forms to the Internal Revenue Service for approval.
Two years ago, he noted, accountants were not able to submit some tax forms until March. “This will no doubt cause delays in filing, and delays in refunds,” he said.