Deductions that Expired after 2016

When a home buyer is unable to make a down payment of at least 20% of the home purchase price, they are required to buy Private Mortgage Insurance (PMI) which is designed to protect the lender in case of default on the mortgage. The PMI premiums have been deductible as an itemized deduction since 2007. However, this tax deduction expired at the end of 2016 and no longer can be claimed as an itemized deduction starting with tax year 2017.

In the lead up to the recently passed Tax Cuts and Jobs Act, Congress considered extending this tax deduction but ultimately did not choose to extend this deduction in the final version of the law that passed. Accordingly, the deduction for PMI as an itemized deduction has expired, and the entry field that is currently found under the Itemized Deduction Menu has been blocked.

Preparers should also note that the Tuition and Fees Deduction also expired at the end of 2016. The Tuition and Fees Deduction allowed certain taxpayers to deduct the cost of college tuition and other education-related expenses, and the criteria for this credit allowed some taxpayers that did not qualify for other education credits a benefit. The Lifetime Learning Credit and the American Opportunity Credit are still available to taxpayers and are not affected by the expiration of the Tuition and Fees Deduction.

Also most residential energy credits expired (except solar electric and solar water heating credits) at the end of 2016.