US Congress on tonight extended tax breaks for 2014. It took senators until now to pass the bill, which the House had already approved. The bill will now be sent to President Obama, who's expected to sign.
Deduction for teachers' expenses: This allows school teachers deduct up to $250 for the costs of classroom supplies they buy with their own money. It's available to all teachers, whether they itemize or not.
Equal treatment of commuting costs: All commuters may reduce their before tax income to account for their commuting costs. Under the law, however, those who drive to work and pay for parking are allowed to exclude more ($250 per month) than those who use mass transit ($130 per month). This measure again provides parity by also allowing mass transit riders to exclude $250 per month.
State and local sales tax deduction: If you itemize your taxes, this measure allows you deduct the state and local sales taxes you've paid in lieu of state income taxes.
The deduction can be a boon for those who itemize and live in Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Those are the seven states that don't impose an income tax but where residents pay sales taxes, either at the state or local levels.
But there are income limitations, and if you take it you may not take other types of education tax breaks, such as the Lifetime Learning Credit. Your deduction also is reduced by any grants and scholarships received to pay for school, as well as any money withdrawn from tax-advantaged, education savings accounts.
Deduction for mortgage insurance premiums: If you only put down a small amount to buy a home you may be required to pay for mortgage insurance to protect the lender against default. This tax break lets you deduct the cost of your premiums if you itemize your deductions.
Income exclusion for mortgage debt that's been forgiven: When you sell your home for less than what you owe the bank or your home is foreclosed, the bank may agree to forgive the remaining debt you owe. But the IRS typically treats that forgiven debt as taxable income to you. This tax break lets you exclude it from your income.
Earnings would grow tax free and the money would not disqualify the disabled person from receiving federal assistance benefits such as Medicaid and Supplemental Security Income so long as it is used to pay for housing, transportation, education and wellness.
Tax-free IRA withdrawals for charity: With this measure, anyone over 70-1/2 may take tax-free distributions of up to $100,000 from a traditional IRA if the money is distributed directly to an eligible charity.
Tax-free savings for people with disabilities: Attached to the extender bill is the Achieving a Better Life Experience (ABLE) Act. That act will permit people who were disabled before the age of 26 -- as well as their family and friends -- to contribute up to a combined total of $14,000 a year to an ABLE account.
Tuition deduction: Among the many education tax breaks on the books, this one is available to all tax filers, whether you itemize or not. With it, you may deduct up to $4,000 in qualified tuition, fees and related expenses for post-secondary education, such as college and graduate school. The deduction may be taken for yourself, your spouse or your dependents.