This morning, Congress passed the Bipartisan Budget Act of 2018, which extended approximately 40 provisions that had expired at the end of 2016 but are now retroactively extended through December 31, 2017. In some cases, certain credits have been extended beyond 2017, and more information will be forthcoming on these items as it becomes available.
Some of the provisions that have been extended are the following:
Private Mortgage Insurance (PMI) has been deductible as an itemized deduction since 2007. This tax deduction expired at the end of 2016 but has now been extended by Congress through tax year 2017. The entry field that is currently found under the Itemized Deduction Menu in the program is currently blocked. However, once programming receives the specifications from the Internal Revenue Service, this field will be re-opened, and we will announce that on this blog.
The Tuition and Fees Deduction also expired at the end of 2016 and has been extended through 2017. 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 allow some taxpayers that do not qualify for other education credits a benefit. This is an above-the-line deduction that is capped at $4,000 for individuals whose AGI does not exceed $130,000 for Married Filing Jointly filers, or whose AGI does not exceed $65,000 for all other filers. Again, these fields have been blocked in the program and we will post to this blog when they become available.
Discharge of Debt on Qualified Principal Residence. Since 2007, the primary method taxpayers have used to reduce the recognition of income for the cancellation of debt on foreclosed homes was a provision that applied only to the taxpayer’s primary residence. Specifically, 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 would take this exclusion on Line 1e of Form 982 by marking that form and entering the amount of debt forgiven. However, this debt relief provision from the Mortgage Forgiveness and Debt Relief Act expired at the end of 2016 and no longer could be used to reduce the amount of taxable income unless certain narrow conditions applied. With the passage of the Bipartisan Budget Act of 2018 this morning, Congress extended this exclusion for discharge of qualified principal residence indebtedness through 2017. Because there still existed limited situations wherein a taxpayer could still elect this exclusion in 2017, no change to the tax program is anticipated. Instead, the primary change is that this exclusion is now available to taxpayers for 2017 in the same manner as it was for 2016.
Incentives for Energy Production and Conservation. Congress also extended the following credits or provisions:
Credit for Non-Business Property through December 31, 2017
Credit for Residential Energy Property for property placed in service through 2022.
Credit for New Qualified Fuel Cell Motor Vehicles through December 31, 2017.
Credit for Alternative Fuel Vehicle Refueling Property through December 31, 2017.
Credit for 2-Wheeled Plug-In Electric Vehicles through December 31, 2017.
Production Credit for Indian Coal Facilities through December 31, 2017.
Production Tax Credit for renewable sources of energy through December 31, 2017.
Credit for Energy-Efficient New Homes through December 31, 2017.
Investment Tax Credit for solar energy, fiber optic solar energy, qualified fuel cells and small wind energy property through December 31, 2020, and then phased out through 2022.
Special Allowance for Second Generation Biofuel Plant Property through December 31, 2017.
Extension of Energy Efficient Commercial Buildings Deduction through December 31, 2017.
Extension of Excise Tax Credit for Alternative Fuels through December 31, 2017.
For taxpayers that have already filed their returns, they will need to amend their returns in order to take advantage of these provisions. TaxSlayer Pro will implement these changes into the program as soon as the specifications become available. Unfortunately, TaxSlayer Pro has to wait until we receive the instructions from the Internal Revenue Service or the returns will reject when they are electronically filed.