Congress passed and the President signed the Certainty and Disaster Tax Relief Act. Here are a few of the extenders that may affect you:
- If you have canceled debt that is also qualified principal residence indebtedness, you may be able to exclude that canceled debt from income. This provision had expired in 2017, but has now been renewed.
- The deduction for mortgage insurance premiums as deductible qualified residence interest has been extended through 2020.
- The medical expenses deduction floor has returned to 7.5% from 10% for 2019 and 2020.
- The above-the-line deduction for qualified tuition and related expenses has been extended through 2020.
- The employer credit for paid family and medical leave and the work opportunity credit which were slated to expire have been extended through 2020.
- A handful of environmentally-related tax breaks were also extended including but not limited to biodiesel fuels credits, and the credit for purchases of new qualified fuel cell motor vehicles.
- The Act extends the 3-year recovery period to race horses two years old or younger placed in service before 2021.
- And for brewers- the reduction of certain excise taxes related to beer, wine, and distilled spirits.
The new law also tweaked some of the rules regarding disaster relief. Taxpayers who were impacted by a major disaster beginning January 1, 2018, and ending 60 days after the law’s enactment can make tax-favored withdrawals from retirement plans with some restrictions. There is, also an automatic 60-day extension for filing returns for those taxpayers affected by federally declared disasters. The new law also temporarily suspends limitations on the deduction for charitable contributions associated with qualified disaster relief, provides special rules for qualified disaster-related personal casualty losses arising in a disaster area, and provides special rules for determining earned income to taxpayers in designated disaster areas with regards to the Earned Income Tax Credit and Child Tax Credit for the tax year 2018.
Let us know if this article brings up any questions that you may have.