Unfortunately, since the legislation was passed so late in 2014, many individuals and companies did not have the time or money to take full advantage of the tax breaks. But there is a bit of good news in this situation – even though they were passed late, they are in effect for your 2014 returns and can lower your 2014 tax bill. The extenders cover a wide range of individual and business tax categories, including mortgage debt relief, business equipment purchases, energy efficient building/home improvements, and leasehold improvements for restaurants/retail. Click here for more information and to see a full list of the extended tax breaks. Take a read through them and/or talk to your tax professional to see how much you can benefit in 2014 from extended tax breaks.
In light of the current uncertainty for 2015, you can be proactive now to prepare for the possibility of the tax breaks being renewed in 2015. You can make arrangements to have access to funds that could be used for tax favorable expenditures. You could arrange access to funds by getting pre-approved for loan/line of credit at your bank or by putting cash into a savings account. Let’s say in November 2015 the tax break for equipment purchases (Sec 179) is renewed for 2015. This would increase the limit of equipment purchase deduction from the current level of $25,000 to $500,000. If you had the funds available you could lower your taxable income by the amount of equipment purchased before December 31, 2015. Another expenditure you might want to be ready to make if the tax breaks are renewed for 2015 is an energy efficient upgrade to your home or business.
One of the many funding sources that you might want to consider is Kabbage. They offer working capital lines of credit that range from $2,000–$100,000. Because it's a line of credit, it is much more flexible than a traditional loan, and there are no fees until it's drawn from. The application process is quick, with no paperwork to file, and approval isn't based solely on a credit score.
But of course, you never want to spend money just to get a tax deduction. However, if the expenditure makes sound financial sense and the tax laws change to make it tax favorable in 2015, you’ll want to be ready. Before making these decisions, you should check with your tax professional.
Happy New Year!