In a rush to keep the government funded through April 2017, Congress passed a $1.1 trillion spending bill last month that includes no mention of tax cut extensions that expired at the end of 2016. But take heart, most of the tax breaks that folks have become accustomed to were made permanent at the end of 2015, including:
- Some college expenses can be deducted under the American Opportunity Tax Credit, which allows a dollar-for-dollar tax credit of up to $2,500.
- Taxpayers can still claim state and local sales tax deductions in lieu of state and local income tax deductions.
- Seniors age 70 1/2 and older who are subject to an annual required minimum distribution from their IRA accounts can have the money paid (up to $100,000) directly to a qualified charity of their choice.
- Businesses with less than $50 million in gross receipts can continue to take advantage of the R&D tax credit for qualified expenses.
However, there are a few tax deductions for homeowners that expired the end of 2016 and will not be available for 2017, as currently stands:
- The PMI deduction, which allowed homeowners to deduct the cost of private mortgage insurance (this insurance is required for homebuyers who purchase a home with less than a 20 percent down payment).
- Mortgage debt: If your lender cancels, or forgives a mortgage debt for you in 2017, it will be considered income and likely be taxable. In previous years, the income saved from debt forgiveness was not subject to tax.
- The tax credits for energy efficiency home improvements expired at the end of 2016 and were not renewed for 2017.
What will likely happen in 2017 is the push toward a major overhaul of the tax system. I don’t know about you, but I would take broadband tax relief any day over dinky credits that target specific behaviors.