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 | 800-276-8319 | Text: 248-800-6013|
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 |