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  • Writer's pictureLiz R

2020 Tax Law Extenders

As per usual, congress has passed a tax bill late in the year AND even extended/renewed expired tax provisions. Here's a list of (what I consider) the most applicable changes:

  1. New parents may take a penalty free qualified retirement plan distribution up to one year after a birth or adoption. The distribution is limited to $5,000.

  2. If you were forgiven mortgage debt you defaulted on, you once again have the ability to exclude that "income" from your tax return. This provision had previously expired in 2017.

  3. Medical expenses are "easier" to deduct as the 7.5% floor has been restored for tax years 2019 and 2020. This means that instead of needing 10% of your Adjusted Gross Income to deduct your medical expenses, you only need 7.5% of AGI.

  4. The Qualified Tuition & Fees is back through 2020. You can choose the larger tax benefit between the Education Credit or the Tuition & Fees Deduction.

  5. Mortgage Insurance Premiums are once again deductible on Schedule A. This had previously expired December 2016. This one is retroactive, meaning you may be able to amend your 2017 & 2018 tax returns to include PMI.

  6. And there is a new 10% credit for the purchase of two-wheeled, highway capable, plug-in electric vehicles.

There were many other tax laws that were added, renewed or extended but the above list will probably affect the most taxpayers. Each of these is only in effect for a certain amount of time or limited as to dollar amounts. Be sure to speak to your tax professional to determine if any of these will apply to your prior year or current year tax return. If you don't have a tax professional, I offer free 15 minute consultations. Schedule your call today.

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