Tax Items in the Bipartisan Budget Act of 2018

You may have heard that Congress was struggling again recently to keep the government open due to the inability to come to a compromise on a budget deal. This seems to occur quite often these days. Well, they did pass a budget deal recently and the President signed it on February 9th. This was only after a 9-hour shutdown of the government in the middle of the night.

This budget law, however, contained many tax extender legislation items that may not have been anticipated. These provisions extend some tax laws through 2017 that had previously expired at the end of 2016. I wanted to identify a few of the more pertinent tax law extenders that were included in the blog this month.

The first of these is the exclusion from income of the discharge of qualified principal residence indebtedness which occurs when a principal residence is foreclosed by the lender or short sold for less than the amount owed. This provision was enacted back in 2007 as the Mortgage Forgiveness Debt Relief Act of 2007. It has provided tax relief over the years for those who either lost their principal residence or made the decision to short sale their property because they were upside down with the value of their home being less than the amount owed on the mortgage.

Another provision is the ability to claim a deduction for mortgage insurance premiums (MIP or PMI) paid related to a home mortgage. These payments remain deductible as qualified residence interest as they have been for many years.

The ability to deduct qualified tuition and related expenses as an above-the-line tax deduction was extended as well.

There were numerous other miscellaneous provisions that affected business entities that were extended also.

Please contact us if you have any questions related to these tax provision extenders. We are knee-deep in the hoopla again as tax season is in full-swing. Join our party and make an appointment to meet or send your tax documents and information as soon as possible so that we can get started earlier rather than later.

Mark J Weech, CPA