Last week we brought to your attention tax extenders made retroactive by the recent bipartisan budget deal. Again, those are tax breaks that had expired at the end of 2016 and weren’t included in last December’s tax reform (the Tax Cuts and Jobs Act). After the passage of the Bipartisan Budget Act, which extended retroactively 36 tax provisions, the IRS announced just yesterday that it has reprogrammed its systems and can now process three of those retroactive tax breaks. This could significantly change your 2017 return.
Taxpayers can now file tax returns claiming:
- Exclusion from gross income of discharge of qualified principal residence indebtedness (often, foreclosure-related debt forgiveness), claimed on Form 982;
- Mortgage insurance premiums treated as qualified residence interest, generally claimed by low- and middle-income filers on Schedule A; and
- Deduction for qualified tuition and related expenses claimed on Form 8917.
These three benefits are the ones most likely to be claimed on returns filed early in the tax season, which means a lot of amended returns (Form 1040X) will have to be submitted. If you’ve already filed and want to claim one of these retroactively renewed tax breaks, just reach out. IRS is working closely with tax professionals to make sure their software can accommodate the newly extended tax provisions, and BGW is ready. Just keep in mind that amended returns can’t be filed electronically and could take up to 16 weeks to process.
What about the other tax breaks extended by the budget act? IRS is still in the process of updating its systems to handle returns claiming those, but, in general, they affect a smaller number of taxpayers -- motorsports race tracks and TV/film production, for example. Our advice, as always, is to (electronically) file as early in the season as possible using the most current laws and information available. Keep your eyes on our blog and news sections, and adjust to the changes as necessary. We’re here to help.