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Deductions & Energy Credits Extended by Appropriations Act

  • Written by Steel Rose

 

Charitable Contribution Deduction

The Act extends through 2021 the $300 ($600 for joint return filers) above-the-line charitable contribution deduction for qualified contributions made by non-itemizers

It also extends the temporary charitable contribution limit provided in the CARES Act. The limitation for deductible cash contributions to a public charity is increased from 60% to 100% for 2020 and 2021.

Transition from Tuition Deduction to Increased Income Limit on Lifetime Learning Credit

The Act repeals the deduction for qualified tuition and related expenses and increases the income limitations on the Lifetime Learning Credit. The phaseout of the Credit will begin at modified adjusted gross income of $80,000 ($160,000 for joint returns). These amounts will not be adjusted for inflation. This change applies to tax years beginning after December 31, 2020

Exclusion from Gross Income of Qualified Principal Residence Indebtedness

The Act extends the exclusion from gross income of qualified principal residence indebtedness discharged/ forgiven through December 31, 2025, previously set to expire December 31, 2020. It lowers the maximum amount of forgiven indebtedness excludible from income to $750,000 ($375,000 for a married person filing a separate return).

Exclusion for Employer Payments of Student Loans

The Act extends the exclusion from income for certain employer payments of principal or interest on a qualified education loan to payments made before January 1, 2026 (i.e., a five-year extension).

Mortgage Insurance Premiums

The Act extends for one additional year, through December 31, 2021, the treatment of mortgage insurance premiums as deductible qualified residence interest.

Health Coverage Tax Credit

The Act provides an additional one-year extension for the health coverage tax credit (HCTC) through 2021. The refundable credit equals 72.5% of the premiums paid by certain individuals for coverage of the individual and qualifying family members under qualified health insurance and was previously set to expire December 31, 2020.

Energy Credits

The Act extends the following credits for one additional year, through December 31, 2021:

  • The nonbusiness energy property credit.
  • The two-wheeled plug-in electric vehicle credit.
  • The energy-efficient homes credit.
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