Last Sunday morning, I was fortunate to participate in the Rockford’s annual “Shop With A Cop” event at the local Meijer. Meijer, the Rockford Lions and Rotary participate in the program coordinated and put together by Rockford’s Police Department. Over 30 local children were given credit of up to $100 and the opportunity to shop for needed items such as shoes and clothing and a toy. Each child was escorted by an officer or public service employee and a helper. It’s a very nice event that allows Christmas to come into those 30 plus households. Santa also took time from his busy schedule to make a visit to Rockford. Thanks, Santa, Chief Dave Jones, Meijer, the Lions and several of the Rockford Leos, the Rotary, and to all of Santa’s helpers who made Shop With A Cop possible.
Congress is up to its regular shenanigans once again. They are about to pass a bill, the Retirement, Savings, and Other Tax Relief Act of 2018 that will extend several tax provisions that had expired on December 31, 2017. This is actually an improvement over their shenanigans of earlier this year when they passed the Bipartisan Budget Act of 2018 on February 9, 2018 that affected 2017 tax returns, many of which has already been filed. At least this year they are making their move before December 31. So what is Congress extending this year? 1. The Tuition and Fees Deduction has been brought back for another year. Why is this important? This deduction of up to $4,000 of qualifying educational expenses reduces total income when calculating a taxpayer’s adjusted gross income. Many deductions, credits, and even penalties are based on the adjusted gross income (agi) figure. Being able to reduce the agi can be very strategic and important. 2. The Mortgage Insurance Deduction is being extended. This amount is a Schedule A deduction and is considered as additional mortgage interest paid. Only taxpayers who do itemize their deductions will benefit from this extender. We have discussed many times the fact that only a select number of taxpayers will be able to itemize deductions this year because of the dramatic increase in the standard deduction. However, those that do itemize may benefit from this extra deduction. 3. The Qualified Mortgage Debt Forgiveness provision is being extended. Cancellation of debt income on a qualifying personal residence of up to $2 million can qualify to be forgiven. The same definition of “qualifying residence” in this provision is also used for excluding the gain upon the sale of a personal residence. Taxpayers who have lost their residence to foreclosure or to a short sale and then receive a Cancellation of Debt 1099C for the amount of debt forgiven will be glad this provision was extended. 4. The Nonbusiness Energy Credit is going to be extended for at least another year. Letting this credit expire never made much sense to me. Most people are in favor of saving heating and cooling costs by replacing old windows and doors; insulating or re-insulating their house; updating a hot water heater or installing a more energy-efficient furnace; or installing a wind system or a geothermal heat pump system. There are all green improvements that in the long run help us use less carbon-based energy. I would think the federal government would want to encourage this behavior. Using credits historically to encourage behavior has been Congress’ mode of operating. This is one credit that could easily be expanded, in my opinion. I will keep you posted as this bill goes through the system to see what other goodies Congress adds to the Retirement, Savings, and Other Tax Relief Act of 2018. It’s that “Other” in the title that will be the most interesting. This is Jerry Coon signing off.
Jerry Coon is an Enrolled Agent.
He owns Action Tax Service on Northland Dr in Rockford.
Contact Jerry at www.actiontaxservice.com