On December 17, 2019, the House of Representatives passed the Taxpayer Certainty and Disaster Tax Relief Act of 2019 (H.R. 1865), with the expectation that the bill will quickly be passed in the Senate and signed into law by the President. As part of the legislation, Congress agreed to reinstate several popular tax breaks that expired at the end of 2017, in most cases through the end of 2020. It is important to note that these provisions were brought back retroactive to January 1, 2018, and as a result, taxpayers who could have benefited from these breaks in 2018, had they been part of the law, will need to file an amended return to realize their tax savings. Below are a few of the more commonly-used tax provisions that will be brought back by the legislation:
- The ability to exclude up to $2 million of debt forgiveness related to a principal residence.
- The deduction in arriving at adjusted gross income for tuition expenses.
- The deduction for improvements made to energy efficient commercial buildings.
- The ability to deduct mortgage insurance premiums as mortgage interest expense.
Also as part of the legislation, an individual’s medical expenses will continue to be deductible only to the extent they exceed 7.5% of adjusted gross income. The floor had been slated to increase to 10% starting in 2019. In addition, the bill would undo an unpopular provision which resulted in a tax on employer-provided parking for nonprofit organizations. Under the Tax Cuts and Jobs Act, employee parking was subject to a 21% unrelated business income tax (UBIT). The parking tax provision would be repealed. Credits set to expire at the end of 2019, including the work opportunity tax credit (WOTC), the new markets tax credit and the employer credit for paid family and medical leave, have been extended through 2020.
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