Submitted by Joel Shabsin, CPA

After waiting for several years, congress passed an extenders bill. And they made many of the extended provisions retroactive to January 1, 2018.

Although many of the expired provisions were extended
retroactively through 2020, the major ones that will affect many of our clients include the following:

1. The mortgage insurance premium deduction has been retroactively extended back to the 2018 tax year. So, many taxpayers who were eligible to itemize deductions with AGI less than $110,000 may be able to amend their 2018 returns and get an additional refund. Since this deducted on Schedule A as mortgage interest, it has no effect on Illinois returns.
2. The tuition and fees deduction has been restated retroactively. Taxpayers who couldn’t claim the AOTC Credit or Lifetime learning credit because of any disqualifying factors may be able to amend their 2018 returns to take advantage of this above the line deduction. Since its an adjustment to AGI, it will have an effect on Illinois returns
3. The $2,000,000 exclusion for forgiven debt on personal residences has also been retroactively restored. If you had any clients with forgiveness of debt on a personal residence who were required to pay tax on the forgiven amount, they can amend their return to take advantage of this provision. It also will have an effect on Illinois taxes.
4. The 7.5% threshold for medical deductions which was supposed to increase to 10% for tax years after 2018 will remain at 7.5%. This will not require an amendment to the taxpayer’s 2018 return, but will make it a little easier to get a deduction for medical expenses for 2019 and 2020 returns.
5. The work opportunity tax credit has been extended to 2020 allowing employers to claim the credit for wages paid to individuals from certain targeted hard to employ groups. This credit is generally 40% of the first $6000 of qualified wages paid to each person of the targeted groups
   that an employer hires. There are 14 targeted groups outlined in the regulations.
6. The credit for the paid family and medical leave available to employers for the 2019 year has been extended to 2020. Without this extension it would have expired at the end of 2019.

If you have any clients affected by 1, 2, or 3 above in 2018, you should amend their return to take advantage of the tax extenders that were finally passed by Congress as part of the Budget Bill for 2020.