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Liberty Tax

Congress creates a Time Machine for Tax Breaks

Time machines are just fiction – aren’t they? Well it seems that in order to prevent a government shutdown, Congress came up with a way to step back in time to give voters some tax breaks for 2017, weeks after Father Time rang in 2018. In fact, the “Bipartisan Budget Act of 2018” was signed into law on Feb. 9th, after many taxpayers had already filed their 2017 taxes.

If you were among those who filed early, you may have missed out on the following tax benefits.

Here’s some of more common tax breaks included in this retroactive legislation:

  • Private mortgage insurance premiums (PMI) deduction
  • Tuition and fees deduction (up to $4,000)
  • Tax credits for qualified energy efficiency improvements such insulation, exterior windows, doors, roofs and HVAC units
  • Tax credits for geothermal heat pumps, fuel cells and wind powered units
  • Tax credits (up to $4,000) for the purchase of fuel cell powered vehicles
  • Exclusion of “income” derived from the cancelled debt for which the taxpayer’s home was used as collateral. This usually occurs when a person’s house is sold for less than the outstanding mortgage, or as part of a “mortgage modification”.

To make the situation even more confounding, the IRS doesn’t have a place on the tax forms anymore to enter most of these items, and tax preparation software hasn’t been updated yet to account for these changes. However, most of these tax breaks can still be claimed by making appropriate adjustments to other line items.

If you missed out on any of these deductions and credits, you can file an amended return to reclaim them.