- Ag Docket
On December 20, 2019, President Trump signed into law the Further Consolidated Appropriations Act, 2020, HR 1865, part two of a spending bill designed to keep the government running through September 2020. Buried within the law’s 715 pages are hundreds of other provisions, including an estimated $426 billion (over 10 years) tax package. The tax package retroactively extends some credits and tax breaks that had been expired for two years. These provisions are included in Division Q of the law, titled the “Certainty and Disaster Tax Relief Act of 2019.’’ This post reviews the extended provisions.
The § 108(a)(1)(E)(ii) provision excluding from gross income the discharge of qualified principal residence indebtedness has been revived, retroactively, through December 31, 2020.
The IRC § 163(h)(3)(E) provision allowing premiums paid or accrued for qualified mortgage insurance by a taxpayer in connection with acquisition indebtedness for a qualified residence to be treated as qualified residence interest is revived, retroactively, through December 31, 2020.
The law amends Section 213(f) to lower the medical expense deduction floor from 10 percent to 7.5 percent through December 31, 2020. The change applies to taxable years ending after December 31, 2018.
The IRC § 222 above-the-line deduction for qualified tuition and related expenses is revived, retroactively, through December 31, 2020.
The law extends retroactively, through December 31, 2020, the following additional Incentives for Employment, Economic Growth, and Community Development:
The railroad track maintenance credit is extended through 2022 (Sec. 112).
Important to struggling biodiesel plants, Section 121 revives the biodiesel and renewable diesel credit that expired at the end of 2017. This credit is extended retroactively through the end of 2022.
The following provisions are retroactively extended through 2020.
Additionally, the law extends the following provisions that were set to expire at the end of 2019, through 2020.
The inclusion of these extenders in the year-end spending package again highlights the difficulty of temporary tax policy negotiation. The Tax Cuts and Jobs Act failed to address these provisions. Many of these provisions expired two full years ago, and 2018 returns were filed without them. While the revival comes as welcome relief to many, it triggers much administrative effort. IRS has to reprogram its software (we will watch for updates), and taxpayers must file amended returns to take advantage of the changes. More significantly, retroactively reviving tax breaks undercuts the incentive they are designed to provide. And since most are revived for only one more year, the cycle continues.
CALT does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. CALT's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.