On February 9, 2018, at the 11th hour Congress passed the budget bill and it was signed into law. In an unprecedented move, Congress extended a few tax deductions and credits to 2017 that had expired on December 31, 2016.
Because there was absolutely no advanced notice to these deductions and credits making their way into the bill, we, as professionals, were preparing and strategizing tax returns based on the knowledge we had for the year. It is important to note, that the IRS was also not made aware of the possible changes, until the bill passed.
This may all seem overwhelming, but as professional tax accounting service providers we are trained to make sense of the madness.
Below is a list of the extenders that may affect your tax return and filing time:
- Above-the-line Tuition Deduction – Applies if you paid tuition for higher education in 2017, didn’t claim a tuition credit for the expense and AGI is under $160,000 if filing married joint or under $80,000 for other filing status.
- Mortgage Insurance Premium Deduction – Generally applies if you are paying premiums on mortgage insurance and your AGI is under $109,000 ($54,500 if filing married separate).
- Credit for Nonbusiness Energy Property – Applies if you made certain energy savings improvement in 2017 to your existing home and in prior years your credits in this category have not exceeded $500. Includes qualified windows, skylights, insulation, certain roofing and certain energy saving equipment.
- Energy Efficient New Home Credit – If you a contractor or manufacturers of homes call you may qualify for a credit.
- Energy Efficient Commercial Building Deduction – If you are an owner of a commercial building and made energy saving improvements you may qualify for a credit.
- Principal Residence Acquisition Debt Forgiveness Exclusion – Applies if your primary residence was foreclosed upon or it was short sold in 2017.
- Fuel Cell Vehicle Credit – Applies if you purchased a vehicle in 2017 that is powered by one or more fuel cells.
- Electric Motorcycle Credit – Applies if you purchased an electric motorcycle in 2017.
- Alternative Fuel Vehicle Refueling Property – Call if you installed one. You may qualify for a tax credit.
If your tax return has yet to be filed and the extenders apply to you, there may be a delay in your filing. Allow the IRS time to modify the necessary forms and/or provide instructions for the work around. If none of the extenders is applicable to you, you are able to file your tax return now (if all financial information is currently available for your tax return).
If your tax return has already been filed and one or more of the above extenders impacts you, please know you are able to amend the tax return once the applicable forms have been released by the IRS (fee for amending the tax return applies).
Senior International Tax Consultant/ CAA
GPL Tax & Accounting