Oops, they did it again…On February 9, Congress passed, and the President signed into law, the “Bipartisan Budget Act of 2018, (BBA)”. BBA changes the tax code for the second time in two months with over 30 “extender” provisions that are retroactive to 2017. There’s a good chance that you could be affected and may even benefit from some of these changes.
These tax changes include, but are not limited to:
The ability to exclude a discharge of residential mortgage indebtedness from gross income. Normally, taxpayers must pay income taxes on forgiveness of debt.
The ability to deduct mortgage insurance premiums.
The above-the-line deduction of up to $4,000 for higher-education expenses.
The $500 energy-efficient home improvements tax credit. You can get a tax of up to $500 (10% of the amount paid) for making energy-efficient home improvements like new windows or upgraded heating/a-c equipment.
The geothermal and small wind residential energy tax credit. For geothermal systems and windmills placed in service from Jan. 1, 2017 through 2019, the credit is 30% of the cost of the system, and then it drops to 26% for 2020 and 22% for 2021. It sunsets on Dec. 31, 2021.
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.
For a full list, see this summary of the Tax Extenders Agreement included in the Bipartisan Budget Act.
The IRS is once again playing catch up and as a result the existing tax forms are not able to accommodate these recent changes. The IRS on February 9 released the following statement: “The IRS is reviewing the legislation signed Feb. 9 that retroactively extended and modified numerous tax provisions covering 2017. We are assessing these significant changes in the tax law and beginning to determine next steps. The IRS will provide additional information as quickly as possible for affected taxpayers and the tax community.”
The new laws impact just about everyone and are extremely complex. Please contact us to see how these new tax saving opportunities may impact you.