In mid-November, President Trump approved a temporary spending bill, known as a continuing resolution, to stave off a government shutdown and to provide time for longer-term appropriations discussions to be held. That continuing resolution was set to expire on December 20. Both the House of Representatives and the Senate have been working towards a longer-term agreement, and now an agreement has been reached.
A deal to fund the government for the remainder of the fiscal year, titled The Further Consolidated Appropriations Act, 2020, H.R. 1865 was achieved by a series of bills passed through the House of Representatives on Tuesday, December 17 and were passed, without change, by the Senate on December 19. The president signed the legislation on December 20, 2019. Included in the new legislation are a number of tax-related provisions, including major retirement changes as provided in the SECURE Act, the extension of a majority of expired or expiring credits and deductions, and the repeal of a handful of changes from previous legislation including three health care related taxes, the requirement for nonprofits to include employee parking into taxable income, and kiddie tax changes. Review our Federal Spending Bill Likely to Bring Much-Needed Tax Benefits insight to learn more.
Several of the tax changes are retroactive and may create a known refund opportunity for many taxpayer returns filed in 2018. The following are a couple of examples:
Deductible Mortgage Insurance Premiums
The itemized deduction for qualified mortgage insurance premiums that had expired as of December 31, 2017, was made available for premiums paid during 2018 through 2020. Financial institutions should be reporting these amounts in Box 5 of Form 1098 again for 2019 and may need to send out corrected 2018 forms to taxpayers if these amounts were omitted. If you paid amounts for qualified mortgage insurance premiums during 2018 and your adjusted gross income is less than $110,000, or $55,000 for those married filing separate, you may have a potential refund.
Nonbusiness Energy Property
A credit is again available for qualified energy improvements made to a taxpayer’s principal residence.This opportunity expired for property acquired after 2017 but can now be taken through 2020. If you purchased energy efficient property such as windows, doors, roofs, and HVAC during 2018 there is a potential for a refund.
With the wide range of tax changes that were included in this new legislation, all taxpayers should be taking steps to determine if they could potentially benefit from filing amended returns.
In addition, tax planning may have been affected. A review of prior retirement and estate planning should be made.
If you have questions or concerns about the new law and how it may affect you, please reach out to your Eide Bailly professional.
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