Tax Extender Law and ABLE Act Help Individual Taxpayers

12/22/2014 / Tara Mattessich

On Friday, December 19, 2014, President Obama signed the Tax Increase Prevention Act of 2014 and the Achieving a Better Life Experience Act of 2014 (“ABLE Act”). The Tax Increase Prevention Act retroactively extends for one year many of the tax breaks that expired at the end of 2013, and includes provisions for individuals, businesses, and energy-related extenders. The ABLE Act adds new Internal Code Section 529A, which provides for a new type of tax-advantaged savings program, a qualified ABLE program, to help in meeting the financial needs of disabled individuals and of families raising children with disabilities.

Tax Increase Prevention Act of 2014

The Tax Increase Prevention Act extends several tax breaks retroactively from January 1, 2014 through December 31, 2014, meaning that the uncertainty returns on January 1, 2015 as to whether these tax breaks will be extended again for 2015.

Following are several of the tax breaks affecting individual taxpayers that have been extended:

  • Charitable IRA rollover permitting tax-free distributions of up to $100,000 from an individual retirement account by taxpayers 70-1/2 or older paid directly to a qualifying charity
  • $250 above-the-line deduction for teachers and other school professionals for expenses paid or incurred for books, certain supplies, equipment, and supplementary materials used by the educator in the classroom
  • Exclusion of up to $2 million ($1 million if married filing separately) of discharged principal residence indebtedness from gross income
  • Parity for the exclusions for employer-provided mass transit and parking benefits
  • The deduction for mortgage insurance premiums deductible as qualified residence interest
  • Option to take an itemized deduction for state and local general sales taxes instead of the itemized deduction permitted for state and local income taxes
  • Increased contribution limits and carryforward period for contributions of appreciated real property (including partial interests in real property) for conservation purposes
  • Above-the-line deduction for qualified tuition and related expenses
  • Above-the-line deduction for charitable contributions of food inventory

The ABLE Act provides for a new type of tax-advantaged savings program under Chapter 529A of the Internal Revenue Code, a “qualified ABLE program.” Each state may either establish and operate its own ABLE program or contract with another state to do so.

The ABLE Act also modifies Chapter 529 of the Code to permit a change in 529 plan investments up to two times (formerly only once) per calendar year. 

If you have questions about the Tax Increase Prevention Act or the Achieving a Better Life Experience Act, contact one of the following attorneys:

Patrick Cole
John Diehl
Todd Freeman
John Fullmer
Melissa Hagstrum
Mary Komornicka
Paul Linstroth
Tara Mattessich
J. Patrick Plunkett
Michael Smith