Wink Inc.
Enrolled Agents
America’s Tax Experts
®
Wink Tax Services
2018 Extender Bill Passed as part of
Budget Bill
Do You Benefit?
Highlights:
•
Mortgage Insurance Premiums
•
Above-the-Line Education Expenses
•
Exclusion of Home Cancellation of Debt Income
•
Credit for Nonbusiness Energy Property
•
Credit for New Qualified Fuel Cell Motor Vehicles
•
Credit for Alternative Fuel Vehicle Refueling Property
•
Credit for 2-Wheeled Plug-In Electric Vehicles
•
Credit for Energy-Efficient New Homes
•
Race Horses as 3-Year Property
•
Energy Efficient Commercial Buildings Deduction
Congress passed the Budget Bill on February 2, 2018. To the surprise
of many, the bill included a number of extenders that retroactively
apply to 2017 returns. Were you lucky enough to benefit? 36 tax
extenders.
Needless to say, these last-minute changes may create a problem for
taxpayers who have already filed their returns and will need to file
amended returns to take advantage of these extenders. The
retroactive changes will cause the IRS some headaches as well. Since
the 2017 forms do not accommodate some of the extended
provisions, the IRS will have redesign and issue updated forms or
provide workaround procedures.
Listed below are the extenders that apply to individuals and small
businesses. Please review them to determine if any of them may
apply to you. If you have already filed, please give this office a call
and let us know, so that an amended return can be prepared to take
advantage of any of these changes. In some cases, it may be
necessary to wait for IRS guidance if the current 2017 forms do not
accommodate the extended provisions. If you have not filed yet and
any of the provisions apply to you, be sure to bring them to our
attention.
•
Mortgage Insurance Premiums – For years 2007 through 2016,
premiums paid on mortgage insurance contracts, in connection with
acquisition debt, issued after 2006 were deductible as home mortgage
interest. The deductibility of these premiums has been retroactively
extended through 2017. The deductible amount of the premiums
phases out ratably by 10% for each $1,000 by which the taxpayer’s
AGI exceeds $100,000 (10% for each $500 by which a married
separate taxpayer’s AGI exceeds $50,000). If your AGI is over
$109,000 ($54,500 for married separate), the deduction is totally
phased out. If you itemize your deductions and have deducted the
insurance premiums in the past, you generally will be able to deduct
them on your 2017 return. Please note that the 2017 Schedule A does
not have an entry for mortgage insurance premiums; we will have to
wait for IRS guidance on how to report it on the tax return.
•
Above-the-Line Education Expenses – For years 2001 through
2016, taxpayers had the option to take a deduction, without
itemizing, for higher-education tuition and related expenses. The
deduction has been retroactively extended for 2017. The deduction is
capped at $4,000 for an individual whose adjusted gross income
(AGI) does not exceed $65,000 ($130,000 for joint filers) or $2,000
for an individual whose AGI does not exceed $80,000 ($160,000 for
joint filers). Individuals who were unable to claim an education credit
generally take this deduction. This deduction is claimed on Form
1040, but the current form does not provide an entry for this
deduction, so we will have to wait for IRS guidance on how to handle
this deduction.
•
Exclusion of Home Cancellation of Debt Income – When a
lender takes a home back and the home’s fair market is less than the
balance on the loan, the taxpayers will generally have cancellation of
debt (COD) income. For years 2007 and through 2016 taxpayers were
able to exclude up to $2 million ($1 million for married taxpayers
filing separate) of the COD income. This exclusion is limited to debt
that was used purchase or substantially improves a taxpayer’s
primary residence and has been extended through 2017.
•
Credit For Nonbusiness Energy Property – The provision to
make existing homes more energy efficient has been extended
through 2017. The provision allows a credit of 10% of the amount
paid or incurred by the taxpayer for qualified energy-efficient
improvements such as qualifying exterior doors, windows and
skylights, metal and asphalt roofs, qualifying heating and AC systems
and certain insulation materials or systems, all of which must meet
energy-savings requirements certified by the manufacturer. This is a
lifetime credit, meaning the $500 maximum credit is reduced by
credit taken in any prior year, going back as far as 2006.
The following are less frequently encountered provisions that were
also extended:
•
Extension of Credit for New Qualified Fuel Cell Motor Vehicles -
This provision extends through 2017 the credit for purchases of new
qualified fuel cell motor vehicles. The provision allows a credit of
between $4,000 and $40,000, depending on the weight of the vehicle.
•
Extension of Credit for Alternative Fuel Vehicle Refueling
Property – This provision extends through 2017 the credit for
installing non-hydrogen alternative fuel vehicle refueling property.
(Under current law, hydrogen-related property is already eligible for
the credit.) Taxpayers are allowed a credit of up to 30% of the cost to
install the qualified alternative fuel vehicle refueling property.
•
Extension of Credit for 2-Wheeled Plug-In Electric Vehicles –
This provision extends through 2017 the 10% credit for two-wheeled
plug-in electric vehicles (capped at $2,500).
•
Extension of Credit for Energy-Efficient New Homes - The
provision extends through 2017 the tax credit for manufacturers of
energy-efficient residential homes. An eligible contractor may claim a
tax credit of $1,000 or $2,000 for the construction or manufacture of
a new energy-efficient home that meets qualifying criteria.
•
Extension of the Classification of Certain Race Horses as 3-Year
Property - The provision extends the 3-year recovery period for
racehorses to property placed in service during 2017.
•
Extension of Energy-Efficient Commercial Buildings Deduction –
The provision extends through 2017 the deduction for energy
efficiency improvements to lighting, heating, cooling, ventilation and
hot water systems of commercial buildings.
There are additional provisions that generally apply to utilities, large
businesses and special interests and are not included in this article.
If you have questions related to any of the above, please give this
office a call.
Wink Inc. Enrolled Agents | 2701 Troy Center Dr, Ste 255 |
Troy | Michigan | 48084 | Tel: 248-816-1220 | TF: 800-276-8319
| Text: 248-800-6013 |