By Selina Stoller, Summit Consumer Receivables Acquisitions, LLC
Congress passed a massive budget deal and reinstated individual tax breaks that did not make it into the December 2017 tax overhaul.
According to Forbes, Congress has returned to its practice of passing tax extenders – on-again, off-again tax laws – which is immediate good news for taxpayers.
Tax filings for 2017 could see additional tax savings. There are tax breaks for mortgage insurance premiums, higher education expenses, energy efficient home-improvement projects and more.
Here are some of the individual provisions in the deal:
- Ability to exclude a discharge of residential mortgage indebtedness from gross income. The provision also modifies the exclusion to apply to qualified principal residence indebtedness that’s discharged pursuant to a binding written agreement entered into in 2017. Normally, taxpayers have to pay income taxes on forgiveness of debt.
- Deduction for mortgage insurance premiums. Mortgage insurance premiums can be treated as deductible interest. This helps if itemizing deductions, and under the December tax overhaul, far fewer taxpayers will be itemizing because of the increased standard deduction. The deduction phases out for taxpayers with adjusted gross income of $100,000 to $110,000.
- Above-the-line deduction of up to $4,000 for higher-education expenses. This includes tuition and related expenses. Taxpayers do not have to itemize to claim this. But the deduction is capped at $4,000 for an individual whose AGI doesn’t exceed $60,000 ($130,000 for joint filers) or $2,000 for individuals whose AIG doesn’t exceed $80,000 ($160,000 for joint filers).
- $500 energy-efficient home improvements tax credit. This is listed under “energy” extenders and affects a homeowner’s personal tax return. You can get a tax credit (that is a dollar-for-dollar reduction in your tax liability) of up to $500 (10 percent of the amount paid) for making energy-efficient home improvements like new windows or upgraded heating/a-c equipment.
- 2-wheel plug-in electric vehicle credit. Did you buy an electric motorbike in 2017? The 10 percent tax credit is back and capped at $2,500.
- 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 percent of the cost of the system, and then it drops to 26 percent for 2020 and 22 percent for 2021. It sunsets on Dec. 31, 2021. (That is the same phase-out schedule home solar is on.)
- 12 Feb, 2018
- Josh Smith