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Late December Tax Changes are Effective Now – and Retroactively!

 

 

By Bill Saylor, CPA           bsaylor@bvcocpas.com

Two major pieces of legislation were finalized and signed on December 20, 2019 and are effective now. Specifically, the Taxpayer Uncertainty and Disaster Tax Relief Act of 2019, part of omnibus spending legislation, extends more than 30 tax provisions that have previously languished since the passage of the Tax Cuts and Jobs Act in December 2017 and the SECURE Act which changes the rules for retirement accounts. The SECURE Act changes will be covered in a separate article.

Extender legislation is generally effective retroactively for tax years beginning after December 31, 2017 and through the 2020 year. Exceptions are noted below in the specific provision.

Individual provisions

  1. Exclusion from gross income of discharge of qualified principal residence indebtedness.
  2. Mortgage insurance premiums are again deductible with the deduction now phasing out starting for income above $100,000 ($50,000 for married filing separately.)
  3. Medical deductions threshold is reduced to 7.5% for years beginning after December 31, 2018.
  4. Qualified tuition and related expenses are again deductible above-the-line for individuals, up to $4,000 for married filing jointly individuals earning up to $130,000 or $2,000 for married filing jointly individuals earning up to $160,000.
  5. Nonbusiness energy property credit for 10% of certain qualified energy improvement and fixed amounts for certain energy-efficient property.

Major Business provisions

  1. Employer tax credit for paid family and medical leave provides a credit from 12.5% to 25% of eligible wages paid to qualifying employees with respect to family and medical leave.
  2. Work Opportunity Tax Credit benefits employers who hire one or more of ten targeted groups.
  3. Empowerment zone tax incentives
  4. Energy efficient homes credit allows contractors to claim $1,000 or $2,000 on qualifying new energy efficient home construction.
  5. Energy efficient commercial buildings deduction allows a deduction of $1.80 per square foot on qualified property or $0.60 per square foot if only certain subsystems qualify.
  6. Plus, the law includes a further 25 industry-specific provisions covering everything from racehorses to utilities.

If you are eligible for any of the above for 2019 please let your tax preparer know when you drop off your taxes. And, if you were eligible in 2018, please discuss the details with your tax preparer at that time; it may be worth amending your 2018 return to take advantage of these changes.






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