Taxes (What’s New)

Signed into law on December 20, 2019, two appropriation bills  that funds the government through September 30, 2020, also includes many tax extenders through 2020. The bills reinstate many tax incentives that are effective for the 2019 tax year through the 2020 tax year. 2018 tax returns can also be amended to take advantage of these changes.

In addition, attached to the appropriations bills was the Setting Every Community Up for Retirement Enhancement Act (SECURE Act) that will affect your ability to save money for retirement and influence how you use money over time. The SECURE Act is designed to ease the looming retirement savings crisis.

Extension of Expiring Provisions:

• Cancellation of qualified principal residence indebtedness exclusion from gross income has been extended through the end of 2020. [IRC §108(a)]
• Mortgage insurance premiums deduction has been extended through the end of 2020. [IRC §163(h)]
• Medical expense AGI limitation threshold reduced from 10% to 7.5% of AGI for all taxpayers for regular tax and for AMT purposes has been extended through the end of 2020. [IRC §213(f)] • Tuition and fees deduction has been extended through the end of 2020. [IRC §222(e)]
• Indian employment credit is extended through the end of 2020. [IRC §45A]
• Race horse two years old or younger treated as 3-year property instead of 7-year property has been extended through the end of 2020. [IRC §168(e)(3)]
• Indian reservation property accelerated depreciation recovery periods has been extended through the end of 2020. [IRC §168(j)]
• Empowerment zone tax incentives has been extended through the end of 2020. [IRC §1391(d)]
• Biodiesel and renewable diesel fuels credit has been extended through the end of 2022. [IRC §40A]
• Second generation biofuel producer credit has been extended through the end of 2020. [IRC §40(b)]
• Nonbusiness energy property credit has been extended through the end of 2020. [IRC §25C]
• Alternative motor vehicle credit for qualified fuel cell motor vehicles has been extended through the end of 2020. [IRC §30B(k)]
• Alternative fuel vehicle refueling property credit has been extended through the end of 2020. [IRC §30C]• Electric vehicle credit for highway-capable 2-wheeled vehicles has been extended through the end of 2020. [IRC §30D]
• Energy efficient home credit has been extended through the end of 2020. [IRC §45L]
• Energy efficient commercial building property deduction has been extended through the end of 2020. [IRC §179D]
• Alternative Fuel Excise Tax credit has been extended through the end of 2020. [IRC §6426(d)]
• New markets tax credit has been extended through the end of 2020. [IRC §45D]
• Employer credit for paid family and medical leave has been extended through the end of 2020. [IRC §45S]
• Work opportunity credit has been extended through the end of 2020. [IRC §51(c)]
• Health coverage tax credit has been extended through the end of 2020. [IRC §35(b)] 

Retirement Plan Provisions (SECURE Act) The new law also includes a number of changes to retirement plans. The following list is a summary of some of these provisions:

• The starting date for making required minimum distributions from an IRA is the year the owner turns age 72.
• The age 70½ limit for making IRA contributions no longer applies.
• Non-spouse inherited IRAs are now subject to a 10-year maximum distribution period.
• Long-term part-time employees qualify to participate in a 401(k).
• 401(k) plans are permitted to adopt qualified birth or adoption distributions.
• A new tax credit is allowed for small employers using auto enrollment into their 401(k) plans.
• Qualified birth or adoption distributions up to $5,000 are exempt from the early-withdrawal penalty.
• Taxable non-tuition fellowships and stipends and nontaxable difficulty of care payments earned by home healthcare workers are treated as compensation for purposes of retirement plan contributions.
• Provisions that allow employers to encourage employees towards lifetime annuities.
• Plan administrative changes that provide additional flexibility for employees and reduce costs for employer sponsors.