The recently signed Bipartisan Budget Act of 2018 had a few tax extenders that are retroactive to 2017. some of the more notable provisions include:
Exclusion for discharge of indebtedness on a principal residence
The provision extends the exclusion from gross income of a discharge of qualified principal residence indebtedness through 2017. The provision also modifies the exclusion to apply to qualified principal residence indebtedness that is discharged pursuant to a binding written agreement entered into in 2017.
Premiums for mortgage insurance (PMI) deductible as mortgage interest
The provision extends the treatment of qualified mortgage insurance premiums as interest for purposes of the mortgage interest deduction through 2017. This deduction phases out ratably for taxpayers with adjusted gross income of $100,000 to $110,000.
Above-the-line deduction for qualified tuition and related expenses
The provision extends the above-the-line deduction for qualified tuition and related expenses for higher education through 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).
Three-year depreciation for race horses 2-years-old or younger
The provision extends the 3-year recovery period for race horses to property placed in service during 2017.
Contact us if you have already filed your return and qualify for these tax extender provisions.
Happy New Year! With the start of 2018, we have fielded a great deal of questions regarding the Tax Cuts and Jobs Act. We figured we would put out a short post to address the most important ones
1. When will the tax changes take effect?
The bill takes effect on January 1, 2018, thus when you file your 2018 taxes (in 2019) you will see the results of the tax changes. W-2 employees will see changes in their paychecks federal withholding in February 2018.
2. How much will the tax changes save a taxpayer?
The short answer is, it depends...what your total income is and where your income is derived. Also other factors can play a role in determining how much you will save.
3. Do I need to do anything to change my withholding?
According to the IRS regarding withholding changes:
“We anticipate issuing the initial withholding guidance in January, and employers and payroll service providers will be encouraged to implement the changes in February,” said the IRS. “The IRS emphasizes this information will be designed to work with the existing Forms W-4 that employees have already filed, and no further action by taxpayers is needed at this time.”
These are just a few of the top questions we are hearing from taxpayers, feel free to contact us if you have any questions regarding the Tax Cut and Jobs Act.