Bipartisan Budget Act of 2018 – Tax Extenders Passed Today

windmill energy photo

Last week, I promised you that the Legislature would pass an extender bill by spring.
Well, good news!

They didn’t wait that long.
They included most of the provisions of  S. 2256 in today’s budget bill.

Alas, Congress only extended them for the short-term.
All the extenders are retroactive to January 1, 2017.

But the bad news is, most of the provisions also expire on December 31, 2017 – for one year only.

You can read all of the provisions in the summary that Congress provided – .


Here are the key provisions that affect you:

Sec. 40201. Extension of Exclusion from Gross Income of Discharge of Qualified Principal Residence Indebtedness.
Effective for debts discharged during 2017, or if a binding written agreement was in effect by December 31, 2017 for the foreclosure or short sale or other transfer or property, which would result in cancellation of debt income.

Sec. 40202. Extension of Mortgage Insurance Premiums (PMI) Treated as Qualified Residence Interest.
Effective for PMI paid during 2017. This deduction phases out ratably for taxpayers with adjusted gross income of $100,000 to $110,000.

Sec. 40203. Extension of Above-The-Line Deduction for Qualified Tuition and Related Expenses.
Effective for tuition and fees paid during 2017.
The Bipartisan Budget Act of 2018 extended this deduction through December 31, 2017. The deduction limits and income phase-outs are as follows:
•             The deduction is capped at $4,000 for an individual with (AGI) up to $65,000 ($130,000 for joint filers)
•             or $2,000 for an individual with AGI does up to $80,000 ($160,000 for joint filers). (See Tip #216)

Sec. 40304. Extension of Classification of Certain Race Horses as 3-Year Property.
Effective for racehorses purchased or placed into service during 2017.
This means you don’t have to use a 7-year r

ecovery life for any qualified racehorses purchased in 2017.

Sec. 40311. Extension of Empowerment Zone Tax Incentives.
Businesses that opt to set up shop in certain designated distressed areas get a variety of incentives for taking on that risk. The incentives include higher depreciation and certain tax credits or increases to other business-related tax credits, including the right to exclude the gain from the sale of certain small business stock.
Effective for certain Empowerment Zone costs paid during 2017.

Sec. 40401. Extension of Credit for Nonbusiness Energy Property.  This is the $500 lifetime credit for the costs of insulating your home, replacing doors and windows and such.  If you have ever claimed this credit before, you cannot get it again.
Effective for qualified home improvements made during 2017.
Use Form 5695

Sec. 50402. Extension and Modification of Credit for Residential Energy Property. This is the credit for 30% of the cost of solar, geothermal, wind and fuel cell installations. The Bipartisan Budget Act of 2018 extended this credit to include geothermal, wind and fuel cell installations. Prior to that, only solar electric and heating properties could still use this credit after December31, 2016.
Effective for qualified home improvements made during 2017 and ending on December 31, 2021.

Use Form 5695

Sec. 40403. Extension of Credit for New Qualified Fuel Cell Motor Vehicles. This is the credit for hybrid vehicles, qualified fuel cell vehicles or other alternative fuel vehicles. The credit varies based on the weight, model and make of the vehicle, and how many vehicles have been sold by the manufacturer.
Use Form 8910 –
For updated information about which vehicles qualify and the amount of allowable credit for the vehicle you bought (in 2017) or are considering buying, visit this IRS page – .
The provision allows a credit of between $4,000 and $40,000, depending on the weight of the vehicle. Effective for qualified vehicles purchased during 2017.

Sec. 40405. Extension of Credit for 2-Wheeled Plug-In Electric Vehicles. This is the golf-cart credit.
This is a 10-percent credit for two-wheeled plug-in electric vehicles (capped at $2,500). You do need to have a tax liability high enough to cover the credit. Like all the previous energy credits, this too, is not refundable.    Use Form 8936
For updated information, visit the IRS site here .
Effective for qualified vehicles purchased during 2017.

Photo by H.P. Brinkmann