achieving a better life experience act

Dear Client and Friends:

The Tax Increase Prevention Act of 2014 (the Act) was passed on December 16, 2014. Thankfully, the Act retroactively extends most the federal income tax breaks that would have affected many individuals and businesses, but only for one year through 2014. This leaves precious little time to take advantage of these tax breaks. The Act also includes another bill, the “Achieving a Better Life Experience Act (ABLE) of 2014.” ABLE establishes a new type of tax-advantaged account for disabled individuals, allowing them to save money for future needs while remaining eligible for government benefit programs. Here is a quick summary of the most important tax changes—starting with those that affect individuals.

Extended Tax Breaks for Individuals

Qualified Tuition Deduction. This write-off, which can be as much as $4,000 or $2,000 for higher-income folks, expired at the end of 2013. The Act retroactively restores it for 2014.

Tax-free Treatment for Forgiven Principal Residence Mortgage Debt. For federal income tax purposes, a forgiven debt generally counts as taxable Cancellation of Debt (COD) income. However, a temporary exception applied to COD income from cancelled mortgage debt that was used to acquire a principal residence. Under […]