2014 Tax Breaks

[BarkyardBQ]

CNN just posted this article: http://money.cnn.com/2014/12/16/pf/taxes/tax-breaks-passed/index.html

Equal treatment of commuting costs: All commuters may reduce their pre-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.

I cannot find any IRS information on this aside from 15-B employers deductions. Can anyone explain more or have a link on real details?

If a driver can exclude costs of driving to work pretax, what does that do for "true cost of commuting"?

[slugline]

This sounds like something I would have heard of by now. I'd be very skeptical that the article author is interpreting the legislation correctly. . . .

[Cpa Cat]

This refers to commuter savings programs established by employers. Employers may choose to allow you take a limited payroll deduction for your commuter expenses, AKA 15-B deductions (as you noted).

For the purposes of this program, only parking fees or mass transit passes count.

The problem is that the parking fee deduction is adjusted for inflation by statute, but the mass transit deduction is not. So every year, they have to extend it/adjust it. It's an obvious candidate for a permanent rewrite - but congress can't agree on even the most obvious stuff.

The statement "All commuters may reduce their pre-tax income to account for their commuting costs" is false.

[BarkyardBQ]

Thanks for the clarification.

[MooseOutFront]

Did congress renew the list of expired tax breaks again this year?  Like for example the sales tax deduction for those itemizing in no state income tax states and the tuition and fees deduction.

[Pooperman]

The best is tucked away at the bottom. ABLE accounts for disabled persons. Allows them to stash money and NOT lose SSI/Medicaid as money in those accounts is sheltered from the arbitrary $2000 limit. It is limited to $14,000/yr contributions and the people must have been disabled before 26. I know two people who will benefit greatly from this: my SO (Cerebral Palsy), and a friend of mine (allergic bee sting left him half paralyzed). The money can only be used for typical things (housing, food, etc), but it's an investment account like a 529 and is essentially a super ROTH (pay taxes on the way in but you can take it out any time for qualified expenses).

It's about time!

Also, question about the public transport stuff. If I have been using rail service, and since this has been extended, can I report it on my tax return such that I am reimbursed for the expenses correctly (including months I goofed up the automatic purchase and had to buy the monthly pass on my own)?

[Cpa Cat]

Did congress renew the list of expired tax breaks again this year?  Like for example the sales tax deduction for those itemizing in no state income tax states and the tuition and fees deduction.

Yes.

Also, question about the public transport stuff. If I have been using rail service, and since this has been extended, can I report it on my tax return such that I am reimbursed for the expenses correctly (including months I goofed up the automatic purchase and had to buy the monthly pass on my own)?

No, unfortunately not.

[Pooperman]

Did congress renew the list of expired tax breaks again this year?  Like for example the sales tax deduction for those itemizing in no state income tax states and the tuition and fees deduction.

Yes.

Also, question about the public transport stuff. If I have been using rail service, and since this has been extended, can I report it on my tax return such that I am reimbursed for the expenses correctly (including months I goofed up the automatic purchase and had to buy the monthly pass on my own)?

No, unfortunately not.

Then WTF was it extended for if it's all but useless?

[Cpa Cat]

Then WTF was it extended for if it's all but useless?

AHAHAHAHA.

Indeed.

Edit: Sorry, I was so busy laughing maniacally at your astute commentary that I forgot to post anything useful. Bear in mind, it was only "extended" for 2014. In essence, congress passed a bill that said, "No change from prior year" because they couldn't agree on any changes (or rather, they did agree on many changes - including making most of these things permanent - but Obama said he was going to veto it, so it fell apart),

Also - the IRS Commissioner was essentially freaking out on their doorstep about tax forms for 2014, begging them to pass something - anything - before they ajourned on Friday.

Nothing has been extended into 2015. So good luck with your tax planning!

[LibrarIan]

So, I am enrolled in a program at work that deducts $70/month out of my paycheck. This money pays for monthly bus passes so I can get to and from work. Essentially I am just allowing my job to automate paying for bus passes. Am I able to deduct the annual $840 expense on my taxes? How so? I've never of 15-B or whatever, so I don't know if this program counts.

[Cpa Cat]

So, I am enrolled in a program at work that deducts $70/month out of my paycheck. This money pays for monthly bus passes so I can get to and from work. Essentially I am just allowing my job to automate paying for bus passes. Am I able to deduct the annual $840 expense on my taxes? How so? I've never of 15-B or whatever, so I don't know if this program counts.

You already have deducted it. Your employer automates it as a pre-tax fringe benefit. You have not and will not pay taxes on that payroll deduction.

[Pooperman]

I want to amend my earlier comment with how the accounts will actually be listed. They will be 529A accounts, and I'm still a bit foggy on all of it. It seems like the disabled people can't contribute, but someone outside could. Basically my SO would have to gift me the money and then I'd gift it back into the 529A. kinda funky, kinda odd, but totally the way it would have to be.

[LibrarIan]

So, I am enrolled in a program at work that deducts $70/month out of my paycheck. This money pays for monthly bus passes so I can get to and from work. Essentially I am just allowing my job to automate paying for bus passes. Am I able to deduct the annual $840 expense on my taxes? How so? I've never of 15-B or whatever, so I don't know if this program counts.

You already have deducted it. Your employer automates it as a pre-tax fringe benefit. You have not and will not pay taxes on that payroll deduction.

Thus shining a spotlight on my level of knowledge on all things tax. Thanks for clearing that up.

[NICE!]

So you can or cannot reduce your AGI by claiming your car commute? Assume no parking expenses. If yes, what #s do you use? Do you have to itemize?

[Cpa Cat]

So you can or cannot reduce your AGI by claiming your car commute? Assume no parking expenses. If yes, what #s do you use? Do you have to itemize?

Your regular commuter mileage is not deductible. Any mileage that is deductible as an unreimbursed employee expense is on Schedule A (itemized) as a 2% Miscellaneous deduction (meaning that you may only deduct the portion that is above 2% of your AGI). Self employed mileage is deducted on Schedule C (not subject to the 2% limit).

Here is a diagram that may help you.