Today, Congress passed the Bipartisan Budget Act of 2018, averting a government shutdown and providing tax relief for millions of Americans. The President signed it into law soon afterward. The law includes special tax relief for certain disaster victims, the extension of expired tax extenders for 2017, and the extension of energy efficient tax credits.
The tax provisions range from tax breaks for individuals and families to energy saving tax benefits. According to Pew’s Analysis of IRS 2012 statistics, about 11 million tax filers claimed one or more tax extender benefits when filing in the past.
TurboTax has you covered and is here to help you understand what the passage of the law means to you.
Here are some of the tax extenders and special provisions for disaster relief victims that were passed today:
Extended Tax Relief for Individuals and Families
Mortgage Debt Exclusion – Unfortunately financial crisis can happen in your life that can’t be avoided. If you experienced a foreclosure, short sale, or loan modification, you may still be able to exclude the amount of debt forgiven on your principal residence from your taxable income on your 2017 taxes.
Mortgage Insurance Premiums – You may not have been happy about the mortgage insurance your lender required when you purchased your home, but you may be able to deduct the amount you paid for the mortgage insurance, which is considered interest for mortgage interest deduction purposes.
Tuition and Fees Deduction – College students or parents may still be able to deduct college expenses including tuition, books, and other supplies, up to $4,000 even if you only took one class. The deduction is capped at $4,000 for individuals with adjusted gross income (AGI) up to $65,000 ($130,000 for joint filers) and $2,000 for individuals with AGI up to $80,000 ($160,000 for joint filers).
Credit for Nonbusiness Energy Property – Homeowners who made energy efficient improvements to their homes like energy-saving roofs, windows, skylights, and doors will still be able to claim the Nonbusiness Energy Property credit for 10 percent of amounts paid for qualified energy efficiency improvements and 100 percent of amounts paid for qualified energy property like high-efficiency water heaters, air conditioning units, and furnaces for taxpayer’s principal residence.
Extension and modification of credit for residential energy property – Extends and phases down the temporary components of residential energy property credit for fuel cells, distributed wind property, and geothermal heat pumps. This matches the extension and phases down for solar property that was provided for in the 2015 PATH Act.
Credit for New Qualified Fuel Cell Motor Vehicles – If you purchased a vehicle that runs on oxygen and hydrogen, which creates electricity known as a fuel cell vehicle, you may receive a credit up to $4,000 if your vehicle weighs 8,500 pounds or less. If you have a heavier vehicle your credit may be more depending on the vehicle’s weight.
Tax Relief and Changes for Victims of Disaster
California Wildfire Tax Benefits – If you are a victim of the California Wild Fires there are special rules allowing access to retirement funds, temporary suspension of limits on deductions for charitable contributions, allowance of deductions for personal casualty disaster losses, and special rules for measurement of earned income to help you qualify for the Earned Income Tax Credit.
Tax Benefits for Victims of Hurricanes Harvey, Irma, and Maria – The provision makes changes to the Disaster Tax Relief and Airport and Airway Extension Act of 2017, including extending the tax relief provided for to cover disaster areas related to Hurricanes Harvey, Irma, and Maria that were declared between September 21 and October 17, 2017.
Don’t worry about knowing these tax laws. TurboTax has you covered and is up to date with the latest tax laws. TurboTax will ask you simple questions about you and give you the tax deductions and credits you’re eligible for based on your answers. If you have more questions while doing your taxes, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent to get your tax questions answered. TurboTax Live tax experts can even review, sign, and file your return.
If you filed your taxes before the Bipartisan Budget Act was passed on February 9th and are eligible for any of the tax provisions mentioned you can amend your tax return to get the bigger refund. TurboTax is here for you and will walk you though amending step-by-step.