Congress again has signed retroactive legislation. They extended through 2020 (partial list):
– Energy Credits (windows, doors, insulation, etc)
– PMI deduction (mortgage insurance premiums)
– Tuition and fees deduction
– Cancellation of qualified principal residence debt (e.g., foreclosures).
We believe the IRS will update the 2018 forms to allow us to amend those returns with the extension of the above tax breaks. Please let your tax preparer know if think you qualified for one of these tax breaks in 2018.
In addition, new tax provisions beginning in 2020 include a change in age for required minimum distributions (RMDs) from age 70 1/2 to 72. Also, for those with a new child (born or adopted), up to $5,000 can be taken from a retirement account with no 10% penalty.
Avoid bank products
like rapid or “instant” refunds. These are very costly and the cost is somewhat
They are costly
because you aren’t really getting your refund, but a short term loan. These
loans must go through a bank or other intermediary, and they charge a substantial
fee. They have risk, because your refund may not be issued. If you owe back
taxes, child support, or student loans, your refund will be taken to pay those
debts. Or, your refund may be held up unexpectedly due to things beyond your
control (e.g., identity theft, someone else claimed your dependent, etc). So the
bank fees are substantial.
They are somewhat hidden, buried in your payment, and you might not realize it. If your refund was supposed to be $5400, and their fees are $400, you will only receive $5000. You may think a $5000 is great, and want it right now! But you just paid $400 to get your own money two weeks earlier.
A client favorite! Our handy Tax Document Collection Pouch is on it’s way. Enjoy collecting all your tax information in one place. If you’re not an existing client, feel free to stop in and pick one up.
Good news. New legislation passed February 8, 2018 extends through 2017 several tax breaks that had expired in 2016. That is good news for many taxpayers.
While there are many, many provisions in the “Bipartisan Budget Act of 2018”, the most common breaks affecting our clients in Ohio are the following:
- Mortgage insurance premium deduction (PMI)
- Tuition and fees deduction
- Energy credit
- Qualified principal residence debt exclusion (very significant for those foreclosed on in 2017)
Bad news. This retroactive change means taxpayers may not have the necessary information to include on the tax return. For example, your mortgage interest statement may not have included the PMI amount.Or you may not have kept the receipts for the energy efficient windows, furnace and insulation you purchased in 2017.
Some taxpayers have already filed and will need to amend their tax return to tax advantage of the updated law.
Lastly, taxpayers who want to take advantage of these provisions will have to wait until tax software is updated and approved.
Driver’s license information is now required for electronic tax return processing. Refunds may be delayed if the driver’s license information is not included. The intent is to help prevent fraudulent tax refunds from being issued.