It’s December of 2014, which means it must be time for Congress to finally make its laws to cover all of 2014.
This has been the way of things for the past four years or so with taxes. Democrats and Republicans fight like dogs over a smelly old bone on what to do with taxes, until the IRS reminds them that, hey, people are going to have to start filing their taxes in a few weeks, we need to tell them something. So then the two political parties make up long enough to kick the tax problem can down another year or two.
A week or so ago, the two parties in Congress came to a consensus of sorts. They had a bill that would cover taxes for the next couple years, which was painstakingly drafted between Democrats and Republicans who had swallowed their pride for a short amount of time. Then, before the bill was even revealed, President Obama threatened to veto it because it didn’t extend a couple of his favorite tax provisions, neither of which were set to expire until after 2016. This, of course, confused Harry Reid and John Boehner, since they were just trying to figure out the stuff that expired in 2013, and anything that happens in 2016 is like a lifetime away. I mean, they have until December 2016 to figure that out!
Anyway, the two regrouped and came up with a one year tax extender, pushing almost all the expired 2013 tax items through the end of December. Guaranteeing a similar fight next year.
So what is extended? The biggest ones were that the Section 179 deduction will remain at $500,000, which was a huge concern among small business, and the Research and Development Credit, which everyone wants.
The rest of the items are basically a grab bag of deductions that just happened to expire at December 31, 2013. For example, we have qualified tuition deductions above the line, sales tax deductions for people who live in income tax free states, treating race horses as 3-year property, extending bonus depreciation, and a whole host of energy tax credits (If someone does have a theory about how these are all actually related, I’d love to hear it).
If you’re bored, or having trouble falling asleep, you can find the whole bill here. As for me, I won’t invest too much time into it until it actually passes. Could be President Obama vetoes it because he doesn’t like that it won’t extend a tax credit set to expire in 2032.