On December 22, just in time for Christmas, Congress gave us a gift of tax extenders. Many of the provisions that were to expire in 2019 were given a new life. Those provisions that were renewed for 2019 and 2020 include:
- The ability to exclude from income any discharge of debt from a personal residence
- The ability to deduct private mortgage insurance (PMI) as interest (if you itemize)
- The floor for deductible medical expenses was decreased to 7.5% from 10% of adjusted gross income (if you itemize)
- The education expense deduction that was not available in 2018 is back for 2019.
Also, the Setting Every Community Up for Retirement Enhancement (SECURE) Act was passed in December allowing better use of retirement plans. Some of those provisions include:
- Part-time workers can now participate in their employer’s 401(k) plans
- The age for taking out required minimum distributions (RMDs) from a retirement plan was raised to 72 from 70 ½.
- Those people who are older than 70 ½ and still working may now contribute to IRAs.
- Inherited IRAs must now be drawn down completely over 10 years instead of the beneficiary’s lifetime.
A few of the taxes created by Obamacare were repealed as well. The “Cadillac Tax” on high-cost health insurance plans was eliminated. The excise tax on medical devices and the Health Insurance Tax, an excise tax paid by health insurance companies were all repealed.
Because these provisions were passed in December, those who can benefit from them can now file their 2019 tax returns on time. No need to extend filing in the hopes that the provisions for 2019 might one day be renewed. There is certainly, at least for now.