EXTENDER BILL PASSED: DO YOU BENEFIT?

Michael Wiener, E.A.

Mortgage Insurance Premiums – If you itemize your deductions and have deducted the insurance premiums in the past, you generally will be able to deduct them on your 2017 return.

EXCLUSION OF HOME CANCELLATION OF DEBT INCOME –

When a lender takes a home back and the home’s fair market is less than the balance on the loan, the taxpayers will generally have cancellation of debt (COD) income. For years 2007 and through 2016 taxpayers were able to exclude up to $2 million ($1 million for married taxpayers filing separate) of the COD income. This exclusion is limited to debt that was used purchase or substantially improves a taxpayer’s primary residence and has been extended through 2017.

ABOVE-THE-LINE EDUCATION EXPENSES –

For years 2001 through2016, taxpayers had the option to take a deduction, without itemizing, for higher-education tuition and related expenses. The deduction has been retroactively extended for 2017. The deduction is capped at $4,000 for an individual whose adjusted gross income(AGI) does not exceed $65,000 ($130,000 for joint filers) or$2,000 for an individual whose AGI does not exceed $80,000 ($160,000 for joint filers).

Individuals who were unable to claim an education credit generally take this deduction. This deduction is claimed on Form 1040, but the current form does not provide an entry for this deduction, so we will have to wait for IRS guidance on how to handle this deduction.

CREDIT FOR NONBUSINESS ENERGY PROPERTY –

The provision to make existing homes more energy efficient has been extended through 2017. The provision allows a credit of 1 percent of the amount paid or incurred by the taxpayer for qualified energy efficient improvements such as qualifying exterior doors, windows and skylights, metal and asphalt roofs, qualifying heating and AC systems and certain insulation materials or systems, all of which must meet energy-savings requirements certified by the manufacturer.

This is a lifetime credit, meaning the $500 maximum credit is reduced by credit taken in any prior year, going back as far as 2006.
EXTENSION OF CREDIT FOR ENERGY-EFFICIENT NEW HOMES –

The provision extends through 2017 the tax credit for manufacturers of energy-efficient residential homes. An eligible contractor may claim a tax credit of $1,000 or $2,000 for the construction or manufacture of a new energy-efficient home that meets qualifying criteria.

EXTENSION OF THE CLASSIFICATION OF CERTAIN RACE HORSES AS 3-YEAR PROPERTY –

The provision extends the 3-year recovery period for racehorses to property placed in service during 2017.

EXTENSION OF ENERGY-EFFICIENT COMMERCIAL BUILDINGS DEDUCTION –

The provision extends through 2017 the deduction for energy efficiency improvements to lighting, heating, cooling, ventilation and hot water systems of commerce al buildings. There are additional provisions that generally may apply to individuals, large businesses and special interests and are not included in this article. If you have questions related to any of the above, please fill free to email or call this office.

If you should have a topic that you would like me to discuss or if you should have a question, please feel free to call 239.403.4410 or e-mail me at michael@mwtaxandaccounting.com.

4280 East Tamiami Trail Executive Suite 302-M | Naples, FL 34112

An enrolled agent, licensed by the US Department of the Treasury to represent taxpayers before the IRS for audits, collections and appeals. To attain the enrolled agent designation, candidates must demonstrate expertise in taxation, fulfill continuing education credits and adhere to a stringent code of ethics.