Big News! Congress Has Reinstated Expired Tax Provisions

Tax season is here and if you’re dreading April 15th, this news might brighten your spirits. Congress has resurrected tax provisions that expired on December 31, 2017. In what has become much too common practice, Congress resurrected the dead provisions retroactively to January 1, 2018. Goody, goody! You can amend your 2018 tax returns to claim the deductions.

And you can relax when filing your 2019 and 2020 tax returns, because lawmakers extended the “extender” tax laws for both years. Thus, no worries until 2021—and even longer for a few extenders that received special treatment.

To make sure you have the extenders in place to your benefit, in this article we’ll tell you what deductions and credits you can take for which tax years.

Back from the Dead

The big five tax breaks that most likely impact your Form 1040 are as follows:

Exclusion from income for cancellation of acquisition debt on your principal residence (up to $2 million)1
Deduction for mortgage insurance premiums as residence interest2
7.5 percent floor to deduct medical expenses (instead of 10 percent)3
Above-the-line tuition and fees deduction4
Non-business energy property credit for energy-efficient improvements to your residence5

Congress extended these five tax breaks retroactively to January 1, 2018. They now expire on December 31, 2020, so you’re good for both 2019 and 2020.

Other Provisions Revived

Congress also extended the following tax breaks retroactively to January 1, 2018, and they now expire on December 31, 2020 (unless otherwise noted):

Black lung disability trust fund tax6
Indian employment credit7
Railroad track maintenance credit (December 31, 2022)8
Mine rescue team training credit9
Certain racehorses as three-year depreciable property10
Seven-year recovery period for motorsports entertainment complexes11
Accelerated depreciation for business property on Indian reservations12
Expensing rules for certain film, television, and theater productions13
Empowerment zone tax incentives14
American Samoa economic development credit15
Biodiesel and renewable diesel credit (December 31, 2022)16
Second-generation biofuel producer credit17
Qualified fuel-cell motor vehicles18
Alternative fuel-refueling property credit19
Two-wheeled plug-in electric vehicle credit (December 31, 2021)20
Credit for electricity produced from specific renewable resources21
Production credit for Indian coal facilities22
Energy-efficient homes credit23
Special depreciation allowance for second-generation biofuel plant property24
Energy-efficient commercial buildings deduction25

Temporary Provisions Extended

Congress originally scheduled these provisions to end in 2019 and now extended them through 2020:

New markets tax credit26
Paid family and medical leave credit27
Work opportunity credit28
Beer, wine, and distilled spirits reductions in certain excise taxes
Look-through rule for certain controlled foreign corporations29
Health insurance coverage credit30

Takeaways

Many observers thought that the tax extenders might be dead once and for all—but they were wrong.

Congress retroactively resurrected the extenders to January 1, 2018, and extended them to December 31, 2020, and a few beyond that, as you saw above.

If you filed your 2018 tax return without the benefit of these tax breaks, you need to amend your tax return and request a refund. The IRS will probably give specific guidance on how to amend your 2018 tax return for the extenders.

And if not, amending a tax return for an extender is not tricky. (But frankly, Congress needs to get its act together and stop this extender nonsense.)

The best news to come from this extender extension is that you now have certainty in your tax planning efforts for 2019 and 2020.

1 IRC Section 108(a)(1)(E).

2 IRC Section 163(h)(3).

10 IRC Section 168(e).

11 IRC Section 168(i).