Common tax provisions that expired after 2017 that weren't part of the Tax Cuts and Jobs Act

Certain common deductions and credits were eliminated at the end of 2016, only to be revived on February 9, 2018 in the Bipartisan Budget Reconciliation Act of 2018 for the 2017 tax year. Unfortunately, these tax extenders have expired and are no longer available to taxpayers. Moreover, none of these provisions currently appear to be on the agenda for Congress, and barring some unforeseen last minute extension are gone for good.

Two of the most commonly used provisions that are no longer available are the Tuition and Fees Deduction, which allowed taxpayers that were not eligible for other education credits to deduct certain education related expenses from their adjusted gross income, and the deduction for Private Mortgage Insurance (PMI), which allowed a taxpayer to deduct the PMI premiums as part of the mortgage interest deduction.

Another major tax provision that expired as part of the Bipartisan Budget Reconciliation: When a taxpayer’s personal residence is foreclosed on, many times the creditor will cancel some or all of the underlying debt after the property is sold. The creditor will send the former home owner/taxpayer a 1099-C with the amount of debt that has been cancelled. When this occurs, the taxpayer reports the cancelled debt as Other Income on Form 1040, Schedule 1, Line 21 (since forgiveness of debt is considered income). Many times, the taxpayer may be eligible to reduce the actual taxable amount caused by the debt cancellation by filing Form 982-Reduction in Tax Attributes Due to Discharge of Indebtedness.

Since 2007,  taxpayers have been able to reduce the recognition of income for cancellation of debt on a foreclosed home for their primary residence. Most taxpayers were permitted, under the Mortgage Forgiveness and Debt Relief Act of 2007, to exclude up to $2 million ($1 million if married filing separately) of the debt being cancelled on their qualified principal residence. Taxpayers with qualifying personal residences marked the exclusion on Line 1e of Form 982 and entered the amount of debt forgiven. The principal residence indebtedness provision from the Mortgage Forgiveness and Debt Relief Act expired at the end of 2017 and no longer can be used to reduce the amount of taxable income unless certain narrow conditions apply.

Going forward, there is no exclusion for qualified principal residence indebtedness discharged in 2018. The only exclusion remaining for principle residence debt discharge is if the discharged debt meets one of the following conditions:

  1. The debt was in fact discharged before 2018 and they received the 1099-C in 2018, or
  2. The debt was discharged after 2017 and the discharge is subject to an arrangement that was entered into and evidenced in writing before January 1, 2018.

Because of these limitations, most cancellation of debt on the principal residence of a taxpayer will no longer qualify to be excluded from income. Instead, in order for the debt cancellation to be reduced, one of the other exclusions on Form 982, such as bankruptcy under Title 11, or insolvency, will have to apply.

The following Energy Credits are no longer in effect:

The 10% credit for qualified nonbusiness energy property

Credit for qualified fuel cell motor vehicles

Credit for the cost of alternative (non-hydrogen) fuel vehicle refueling property

Credit for plug-in electric motorcycles and two-wheeled vehicles

Credit for qualified second-generation biofuel produced.

Credit for biodiesel and renewable diesel, which includes the biodiesel mixture credit, the biodiesel credit, and the small agri-biodiesel producer credit

Production credit for Indian coal facilities

Credits for facilities producing energy from certain renewable resources

Credit for each qualified new energy-efficient home constructed by an eligible contractor and acquired by a person from the eligible contractor for use as a residence during the tax year

Depreciation allowance equal to 50% of the adjusted basis of qualified second-generation biofuel plant property

Deduction for energy-efficient commercial buildings

Special rule for sales or dispositions to implement Federal Energy Regulatory Commission or state electric restructuring policy for qualified electric utilities have been eliminated

Excise tax credits for alternative fuels and the Sec. 6427(e) outlay payments for alternative fuels.

The Bipartisan Budget Act extended through 2021 the credit for residential energy efficient property calculated on Form 5695 against the cost of qualified fuel cell property, small wind energy property, geothermal heat pump property, qualified solar electric property, and solar water heating property. Also extended through 2021 was the investment credit calculated on Form 3468 for geothermal heat pump, microturbine plant property, combined heat and power system, qualified fuel cell, qualified small wind energy, and fiber-optic solar lighting, the latter three being subject to a phaseout.

The following Business Credits are no longer in effect:

Indian Employment Credit

Railroad Track Maintenance Credit

Mine Rescue Team Training Credit

Race Horse Depreciation provisions which allow the use of three-year property instead of seven-year property

The seven year recovery period for motor sports entertainment complexes

The use of accelerated depreciation for qualifying property used predominately within a Indian reservation.

The Section 179E election to deduct 50% of the cost of mine safety equipment

The Section 181 special election rules for film, television and theatrical productions

Sec. 1391 empowerment zone tax incentives

The American Samoa economic development credit.