Many Tax Credits & Deductions Permanent, but a Few Vanish
Many Popular Tax Rules Now Permanent, but a Few Vanish
Frequent revisions in tax laws can make planning tough. Fortunately, a number of popular tax provisions have been made permanent. One is the American Opportunity Tax Credit, which can provide a dollar-for-dollar credit of qualified tuition and related expenses. Another is the law that allows you to deduct state and local sales taxes instead of income taxes. This is a big win for taxpayers who live in states with no income taxes.
The deduction of up to $250 in unreimbursed classroom expenses for elementary and secondary school administrators and teachers is also now permanent. People over age 70½ who must take required minimum distributions from their IRAs can now depend on being able to direct those funds to qualified charitable organizations if they choose—and exclude the distribution from their income. These are just a few examples of the provisions that were made permanent.
However, some tax benefits did expire at the end of 2016, including:
- Deduction of premiums on mortgage insurance
- Deduction (above-the-line) for tuition and related qualifying expenses (education credits are available but this deduction can be used by some taxpayers who do not qualify for those credits)
- Exclusion of mortgage forgiveness from gross income on a principal residence (i.e., if a lender forgave part of a loan for a homeowner facing foreclosure, the homeowner would not be taxed on that amount if it was below $2 million.)
These provisions can be claimed on the 2016 return, to be filed in 2017, but not on future returns unless Congress renews them.
What’s the status of the tax laws that have the most important impact on your return? And which tax-saving opportunities are you missing? Speak to a CPA who can identify opportunities for you to save money not only on your taxes but with all your financial decisions.