The Most Endangered Federal Tax Deductions

CNBC has put together a list of tax deductions that may be eliminated as the deficit swells. It's not certain where cuts in deductions will come, but the below list provides a good guide as to deduction eliminations that are being proposed by various individuals. Read it and weep:

1. A higher capital gains tax is a possibility. While current rates expire at the end of 2012, the Obama administration would like to raise capital gains rates.

2. Both the administration and Congress have proposed raising the R&D tax credit as well as the related alternative simplified credit or ASC, a simpler way for businesses to calculate the credit.

3. Congress extended the IRA charitable donation provision through 2011, but it will lapse in 2012 if lawmakers don’t act. Donors older than 70 ½ may contribute up to $100,000 of IRA assets directly to one or more qualified charities. While there’s no deduction, the gift is excluded from income.

4. Under the current tax exemption for employer-sponsored health insurance, your employer’s portion of your health premium is tax exempt. If, however, the subsidy was axed and your employer instead gave you a raise to cover those health costs, you’d have a higher taxable income or higher tax bill.

5.A deduction of up to $4,000 for qualified education expenses expires at the end of 2011.

6. Interest paid on a mortgage is tax deductible if itemized. Roughly a quarter of all tax filers claim the popular tax deduction. There is much talk about eliminating this deduction.

7.The state sales tax deduction is scheduled to expire at the end of 2011.

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