On December 20, President Trump signed into law the “Taxpayer Certainty and Disaster Tax Relief Act of 2019.” The Disaster Act extends over 30 Code provisions, generally through 2020. Below are some highlights of the extensions.
Note: There are opportunities to be able to go back and amend returns already filed in order to take advantage of the below extender items.
- Energy Efficient Commercial Buildings Deduction (179D) – The Act extends the deduction for energy efficient improvements to property placed into service before January 1, 2021. Improvements include lighting, heating, cooling, ventilation and hot water systems of commercial buildings. The federal deduction is up to $1.80 per square foot of the constructed or renovated building.
- Architects, engineers, and contractors working on new or renovated government building projects constructed between 2016-2020 are potentially eligible for 179D deductions. Qualified work includes work on a government building, such as a school, state university building or military base.
- Energy Efficient Homes Credit (45L) – The federal tax credit is $2,000 per dwelling unit for exceeding certain energy efficiency standards. The credit is to be claimed in the tax year each unit is first sold or leased. The Act extends the credit for energy-efficient new homes to homes acquired before January 1, 2021. The tax credit has been retroactively extended for 2018, 2019 and through the end of 2020.
- Work Opportunity Tax Credit – Extended through 2020. This credit is a general business credit to employers hiring individuals who are members of targeted groups under the Work Opportunity Tax Credit program.
- Exclusion from gross income of discharge of qualified principal residence indebtedness – The Act retroactively extends this exclusion to discharges of indebtedness before January 1, 2021. This applies to discharges of indebtedness after December 31, 2017.
- Treatment of mortgage insurance premiums as qualified residence interest – Extended through 2020 for amounts paid or incurred after December 31, 2017.
- Deduction of qualified tuition and related expenses – Above the line deduction for qualified tuition and related expenses for higher education. The Disaster Act retroactively extends this deduction through 2020. This applies to tax years beginning after December 31, 2017. The deduction is capped at $4,000 for an individual who’s AGI does not exceed $65,000 ($130,000 for joint filers) or $2,000 for an individual who’s AGI does not exceed $80,000 ($160,000 for joint filers).
- Reduction in medical expense floor deduction – Individual can claim an itemized deduction for unreimbursed medical expenses to the extent they exceed 7.5% of AGI for tax years beginning after December 31, 2018 and before January 1, 2021. This extends the deduction allowed for tax years 2017 and 2018.