Proposed Tax Bills to Help You

Despite a massive tax bill enacted at the start of this year, there are a number of new tax proposals in the works. Whether any of them will ultimately come to pass remains to be seen. However, if you want to support any of them, tell your representatives in Congress.

Increased student loan interest deduction.Currently, up to $2,500 in student loan interest can be deducted annually by those with income below set amounts. A bill would raise the deduction limit to $5,000 ($10,000 for joint filers) starting in the year after the measure is enacted. The proposal would not eliminate income caps and, in fact, would eliminate the inflation adjustments to those caps.

Remove charitable deductions from itemized deduction phase-out. Starting in 2013, high-income taxpayers lose some of their itemized deductions. A bill would exclude deductions for charitable contributions from this phase-out. (Currently, medical deductions, net investment interest, casualty losses, and wagering losses are excluded from the phase-out).

Eliminate the use-it-or-lose-it feature of medical FSAs. Currently, salary contributions to medical flexible spending accounts (FSAs) that are not used to pay qualified medical expenses by the end of the year (or the end of a grace period if the company has one) are lost forever. The bill would repeal this forfeiture for tax years beginning after 2014. However, it would require unused amounts to be distributed, which would then make them taxable.

Source: H.R. 1527; H.R. 1475; H.R. 1634