US – Tax Extenders in Bipartisan Budget Act of 2018 | KPMG | GLOBAL

United States – Tax Extenders in Bipartisan Budget Act of 2018

US – Tax Extenders in Bipartisan Budget Act of 2018

This report covers the U.S. Bipartisan Budget Act of 2018, which includes certain tax-related measures and retroactively extends through the 2017 tax year 33 “expiring provisions” or “tax extenders” that expired on December 31, 2016, many of which apply to individuals.

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On February 9, U.S. President Donald Trump signed into law a short-term government spending and budget bill, the Bipartisan Budget Act of 2018 (the “Act”).1  The Act includes certain tax-related measures and retroactively extends certain other tax measures that had expired at the end of 2016.

WHY THIS MATTERS

Although the Act makes changes that apply to the 2017 tax year, it was not passed until 2018, making it impossible for taxpayers to take its provisions into account in doing 2017 year-end tax planning.  However, the Act’s extenders will bring some welcome relief to those who are able to take advantage of its provisions in preparing their 2017 tax returns.

Tax Provisions Extended by the Act

The Act retroactively extends through the 2017 tax year 33 “expiring provisions” or “tax extenders” that expired on December 31, 2016.  Of these 33 expiring provisions extended by the Act, the following apply to individual taxpayers: 

  • Exclusion from gross income of discharge of indebtedness on qualified principal residence indebtedness;
  • Above-the-line deduction for qualified tuition and related expenses;
  • Mortgage insurance premiums treated as qualified residence interest;
  • Credit for section 25C non-business energy property;
  • Credit for residential energy-efficient property;
  • Alternative motor vehicle credit for qualified fuel cell motor vehicles;
  • Credit for alternative fuel vehicle refueling property;
  • Two-wheeled plug-in electric vehicles; and
  • Credit for construction of energy-efficient new homes.

Other Tax Measures

Additionally, the Act contains a number of other tax-related provisions that had originally been included in various versions of the recently enacted tax reform legislation,2 but had been removed prior to passage of the final bill, which was signed into law into December 2017.  Among these provisions are as follows:

  • Tax relief related to the California wildfires and Hurricanes Harvey, Irma, and Maria;
  • Individuals held “harmless” on improper levy on retirement plans;
  • Modification of user fee requirements for installment agreements;
  • Simplified filing requirements for individuals over age 65 years;
  • Provisions related to whistleblower awards;
  • Simplification of rules regarding records, statements, and returns (through December 31, 2019);
  • Modification of rules relating to certain hardship withdrawals; and
  • Treatment of foreign persons for returns relating to payments made in settlement of payment card and third-party network transactions.

Tax Relief Related to the California Wildfires

Previous legislation3 provided for temporary tax relief and incentives to victims of Hurricanes Harvey, Irma, and Maria.  The Act provides similar temporary tax relief and incentives to victims of the 2017 wildfires in California.   In part, the recently enacted legislation:

  • provides an exception to the 10-percent early retirement plan withdrawal penalty for qualified wildfire distributions; 
  • provides for the re-contribution of retirement plan withdrawals for home purchases cancelled due to wildfire;
  • provides flexibility for loans from retirement plans for qualified wildfire relief;
  • increases the casualty loss deductible from $100 to $500;
  • eliminates the requirement that uncompensated personal casualty losses exceed 10 percent of adjusted gross income to qualify for deduction; and 
  • eliminates the requirement that affected taxpayers must itemize deductions in order to deduct their casualty losses related to the wildfires.

FOOTNOTES

Bipartisan Budget Act of 2018, H.R. 1892, (PDF 700 KB) 115th Congress, (February 9, 2018).

2  An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018, H.R. 1, (PDF 490 KB) 115th Congress, (December 22, 2017), now Public Law No.115-97.  For prior coverage, see GMS Flash Alert 2017-192, December 22, 2017.  

Disaster Tax Relief and Airport Extension Act of 2017, H.R. 3823, 115th Congress, (Sept. 29, 2017), now Public Law No. 115-63.  For prior coverage, see GMS Flash Alert 2017-148, October 9, 2017.

Now Available: Taxation of International Executives: United States

Taxation of International Executives covers relevant income tax and social security rates, together with the key aspects of the tax legislation relating to expatriate employees working in various countries.  In addition, planning opportunities, capital taxes, and local taxes are also covered.  Taxation of International Executives: United States, the annual publication from KPMG International, has been updated to account for U.S. tax law in effect as of December 31, 2017.  This edition also includes provisions affecting individuals introduced by the Tax Cuts and Jobs Act (now Public Law No. 115-97).  To access the publication – in a convenient and easy-to-use .html format – click here.

For other countries’ Taxation of International Executives, click here.

The above information is not intended to be "written advice concerning one or more Federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230 as the content of this document is issued for general informational purposes only.

The information contained in this newsletter was submitted by the KPMG International member firm in the United States.

© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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