Budget Act 2018 Reinstates Tax Breaks

Although the Bipartisan Budget Act of 2018 was not intended to be “tax legislation,” the law reinstated a few 2017 tax breaks including:

• The above the line education deduction for tuition and fees for up to $4,000 if joint income does not exceed $160,000.
• The mortgage insurance premium deduction may be itemized for one more year as a part of the “mortgage interest” deduction.
• The ability to not report the cancellation-of-indebtedness income for homeowners who sold their primary residence in an underwater-mortgage short sale was reinstated for 2017.

Additionally, taxpayers who had a “wrongful or improper IRS levy” against their IRA may now roll the money back into their IRA. And, Disaster relief is provided for those effected by California wildfires in 2017.

Finally, there is a new Form coming in 2019. That’s right, the IRS is directed to create 1040SR to provide a simplified tax filing similar to Form 1040EZ for seniors 65 or older, who also report Social Security benefits, pensions and retirement account distributions.