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cbslee

RETROACTIVE TAX EXTENDERS/DISASTER RELIEF BILL

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A bipartisan bill combining the usual tax extenders with a disaster relief bill which would be retroactive to Jan 1st, 2018 thru December 31st 2019 is on the move in the Senate

cosponsored by senior members of both parties. The bill extends 26 provisions that expired at the end of 2017 and 3 provisions that expired at the end of 2018, including:

1.  Tuition Fees deduction reducing AGI

2.  7.5 % Floor Medical Deduction

3.  Itemized deduction of PMI as qualifying mortgage interest.

4. The usual Business Energy Tax Credits

5. A grab bag of Disaster Relief Tax Benefits.

Unfortunately, there is no mention of any TCJA Technical Corrections.🙄

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AW hell!!!!

7.5% medical is already in the TCJA for 2018 but not for years beyond.  The PMI is the big PITA here.  AGAIN.

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5 hours ago, joanmcq said:

AW hell!!!!

7.5% medical is already in the TCJA for 2018 but not for years beyond.  The PMI is the big PITA here.  AGAIN.

For all those PMIs we will amend, I will happily do them after April 15 and charge for the amendments. Very few of mine will change because of the increased standard, though. 

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At least CA never conformed to allowing a deduction for PMI, so all of my state-only itemizers are off the hook.

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This commentary from Politico spells out the murky future of this bill:

EXTENDERS PROCESS GETS EXTENDED: Remember when tax writers believed they had to restore those dozens of temporary tax breaks within a year of their expiration? No more: The last extenders package passed in February 2018, more than a year after the incentives expired. And this year? There’s no telling when any of the tax breaks might get revived.

The Senate Finance Committee — led by Chairman Chuck Grassley (R-Iowa), a reliable supporter of preferences for biodiesel — has been pushing to wrap up extenders more quickly. But people watching the issue say they detect no real sense of urgency out of the House, and that the extenders are likely to slip past April 15 unless something changes — meaning that the current filing season would end, and taxpayers and businesses would, presumably, be filing without a clear understanding of whether those tax breaks would once more get new life.

Of course, the tax-writing committees know that a lot of businesses at least file extensions until Oct. 15, which could ease the pressure for the House and the Senate to make a deal. It’s also far from the first issue where House Ways and Means Chairman Richard Neal (D-Mass.) has been proceeding methodically (think the president's tax returns), as he tries to integrate 10 new Democrats into the panel.

Still, Sen. Ron Wyden of Oregon, the top Democrat at the Finance Committee, told Pro Tax’s Aaron Lorenzo on Tuesday that he believes a bit of support is beginning to take hold in the House, where new Ways and Means lawmakers have been learning about extenders. “I’ve seen it building because everybody’s getting the same kind of concerns from home on uncertainty and what’s the timetable,” Wyden said. And stay tuned: Grassley and Wyden will soon lay another marker on tax extenders, likely on Thursday, according to a Finance source.

The observation that the passage of this bill may not happen until after April 15th is an on point example of the times that we live in.

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Do any policymakers of either party have a clue about how much work they cause everyone by spending their time playing politics instead of doing actual work?  They love to change the tax code on the last days of December so IRS employees have to scramble to update software, forms, pubs, etc.  Last year they passed the extender bill in mid-February, when lots of returns had already been filed.  This caused many banks that left PMI off their 1098s to pay for printing and mailing new forms, many tax pros to sift through completed returns that needed amending and then amending them, the IRS to have people hand process all those amendments.  I've noticed this year that the banks are including PMI on the 1098s even though it doesn't count (yet).  I have been keeping a list of clients who have PMI, might benefit from the tuition and fees deduction, etc. so I don't have to comb through my list of completed returns to try to remember who might benefit.  The policymakers make it sound like (and may believe) they are helping people by doing things like the extenders, but they are actually creating havoc everywhere.

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I doubt they are concerned about the extra work they cause.

I am certain they are far more concerned about the pressure they are receiving from the lobbyists of the 50 Industry groups that are pushing hard for this bill to be passed!

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11 hours ago, cbslee said:

I doubt they are concerned about the extra work they cause.

I am certain they are far more concerned about the pressure they are receiving from the lobbyists of the 50 Industry groups that are pushing hard for this bill to be passed!

Bio fuel industry is giving the big push on this.

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In the middle of the bill is what I believe to be new tax extender :

Sec. 122. Exclusion from gross income of discharge of qualified principal residence indebtedness (sec. 108(a)(1)(E)). The provision provides through 2019 a maximum exclusion from gross income of $2,000,000 for a discharge of qualified principal residence indebtedness. Generally, indebtedness must be the result of acquisition, construction, or substantial improvement of primary residence. The provision also modifies the exclusion to apply to qualified principal residence indebtedness that is discharged pursuant to a binding written agreement entered into before January 1, 2020. 

Very interesting, how many taxpayers really need a $2,000,000 exclusion ?

I'll bet there is a special favor behind the inclusion of this item!!!!

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Tax Extenders still in limbo:

 

"The House Ways and Means Committee in Congress held a hearing on Tuesday to discuss temporary tax provisions and the urgency of both currently expired provisions and those set to expire. According to the Joint Committee, there are 80 provisions set to expire between now and 2027, and around 29 provisions which have expired in 2017 or 2018.

Many of these provisions have been routinely extended and are often expected to be extended, including clean energy and energy efficiency incentives that have left taxpayers in limbo.

Although the hearing was set to discuss these temporary policies in the Internal Revenue Code, the discussion quickly turned political, with arguments from both sides about the value and impact of the Tax Cuts and Jobs Act and how it was enacted. The limited discussion about actual tax extenders led to a suggested outside third-party review to determine which provisions should be extended and which should end. However, it is unclear where this will go."  

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FYI for all, when posting please remember the forum policy of limiting the discussion to only the tax law and its provisions, and that all commentary related to politics, politicians, or their motivations will be hidden or deleted.  Thanks.

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1 hour ago, WITAXLADY said:

anything about 2106 expenses??

That is not included in any list that I have seen.

 

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I read that IRS is considering moving those excess deds to the not-2% category.  The notice said they will rule on it later.  If they decide to do that, and congress reinstates the extenders, we can all look forward to no downtime this summer.  Instead we'll be amending return after return.  I don't know about anyone else, but amendments are a pain, more so because they have to be assembled and paper filed.

I have seen the loss of deduction for investment advisory fees hurt a lot of people.  Several but not a lot of outside sales clients are getting killed by the loss of their mileage deductions.  On the other hand, that whole misc expenses category was rife with abuse.  I am trying to remember to choose sales tax instead of income tax for those clients who are way over the $10k cap just with their real estate and property taxes so any state refund doesn't show up as taxable next year.  I wonder what the software will do when they essentially couldn't deduct state income taxes because the category was maxed out.

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