Tax Tip: Extenders
The Consolidated Appropriations Act of 2020, which was signed into law December 20, 2019, included a wide range of tax provisions and extenders. The Act extended many tax provisions retroactively to January 1, 2018 and are effective through December 31, 2020. The following extended tax breaks could impact your individual tax return:
- Exclusion from income for cancellation of acquisition debt on your principal residence
- Mortgage insurance premiums allowed as mortgage interest deduction if you itemize
- Floor for medical expense deductions goes back to 7.5% from 10%
- Tuition and fees deduction allowed for qualified education expenses
- Credit for energy-efficient improvements to your residence (subject to $500 lifetime credit limit)
Multiple business related tax provisions have also been retroactively extended to January 1, 2018. Many of these extended business tax breaks are industry specific are not applicable to most taxpayers. The following are a few of the extenders that we see most frequently in our area:
- Indian employment credit
- Accelerated depreciation for business property on Indian reservations
- Empowerment zone tax incentives
- Biodiesel and renewable diesel credit
- Energy-efficient commercial buildings deduction
You will need to amend your 2018 tax return in order to take advantage of the extenders.
Consult with your tax professional at Ketel Thorstenson about these or other tax matters because each situation is different. Don’t navigate the difficult and ever changing tax codes and legislation on your own. Ketel Thorstenson CPAs and tax professionals receive advanced training and continuing education all year long to keep our service on the forefront of the tax industry. Call us today for guidance on tax planning, tax return preparation, and Tax Reform affects or questions.