Extended tax provisions for individual taxpayers

These provisions for individuals were extended by the Taxpayer Certainty and Disaster Tax Relief Act.

January 07, 2020

On December 20, 2019 the Taxpayer Certainty and Disaster Tax Relief Act was signed into law. This tax law retroactively extended many popular tax provisions. The following are available for 2018, 2019, and 2020.

Exclusion from tax for qualified principal residence indebtedness (QPRI)

Qualified principal residence indebtedness (QPRI) exclusion. Although cancelled or forgiven debt is usually taxable, debt that is forgiven on your principal residence may be excluded from gross income and from tax. Your lender will issue Form 1099-C showing the forgiven debt. The QPRI exclusion is for up to $2 million dollars ($1 million for married taxpayers filing separate returns) of debt used to buy, build, or improve your main home. The exclusion is claimed on Form 982.

Itemized Deductions on Schedule A

Deduction for mortgage insurance premiums. The cost of mortgage insurance premiums can be treated as deductible home mortgage interest. Your lender will show the premiums you paid on Form 1098. Qualified mortgage insurance includes private mortgage insurance (PMI) and insurance provided by federal agencies such as the Federal Housing Administration. The deduction for mortgage insurance premiums is an itemized deduction claimed on Schedule A.

If your AGI is more than $100,000 ($50,000 if married filing separately), but not more than $109,000 ($54,500 if MFS) the amount of mortgage insurance premiums that are otherwise deductible is reduced. The deduction is phased out completely if your AGI exceeds $109,000 ($54,500 if MFS).

Deduction for medical expenses. If you itemize deductions, you may deduct qualified medical expenses you paid that are more than 7.5% of your adjusted gross income (AGI). Qualified medical expenses include visits to doctor’s offices, prescription medicines, surgery, and more. The expenses may be for yourself, your spouse, and your dependents. Expenses may not be reimbursed by insurance. The medical expense deduction is claimed on Schedule A. Note: The 7.5% of AGI limit already applied for 2018. It was extended for 2019 and 2020.

Tuition and Fees Deductions on Schedule 1

Tuition and fees deduction. The tuition and fees deduction is a deduction of up to $4,000 of tuition and fees paid for higher education expenses. You do not need to itemize in order to claim this deduction. The deduction is limited if your adjusted gross income (AGI) is $65,000-$80,000 ($130,000-$160,000 if you’re married and filing a joint return). If your AGI is over these ranges the deduction is not available. The tuition and fees deduction is claimed on Form 8917. You might benefit from the tuition and fees deduction if you do not qualify for the American opportunity credit and your AGI is too high to claim the lifetime learning credit.

Credits for nonbusiness energy property, alternative vehicles, and health coverage

Nonbusiness energy property credit. The nonbusiness energy property credit is a credit of up to $500 (lifetime maximum) for making energy efficient improvements to your main home. Qualifying improvements include windows, doors, insulation, furnaces, central air conditioning units, and other property that meets certain energy efficient standards. The nonbusiness energy property credit is claimed on Form 5695

Alternative vehicles

  • 2-wheeled plug-in electric vehicle credit. A credit for 10% of the cost of a new qualified 2-wheeled plug-electric vehicle. The maximum credit is $2,500. The credit is claimed on Form 8936.
  • Fuel cell motor vehicle credit. A $4,000 to $40,000 for the cost of a new qualified fuel cell motor vehicle, such as a hydrogen fuel-cell vehicle. The credit is claimed on Form 8910.
  • Alternative fuel vehicle refueling property credit. A credit for the cost of new qualified alternative fuel vehicle refueling property, such as an electric car charging station. The credit is claimed on Form 8911.

Health coverage tax credit (HCTC). The HCTC is a credit for 1) individuals eligible for Trade Adjustment Assistance because of a job loss, or 2) individuals age 55-64 whose defined benefit pension plans were taken over by the Pension Benefit Guaranty Corporation. The HCTC is claimed on Form 8885. Note: This credit was available through 2019 and is now extended through 2020.

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