Financial matters: New SECURE Act brings back some chances for greater savings

I really enjoy writing articles for FLORIDA TODAY, where my columns have run over the past seven years. It is always a pleasure to teach and educate readers on some of the various pitfalls, minefields, and booby traps that they can run into in dealing with their tax returns (whether they prepare it themselves or not).

My peers who have been in this column in the last few weeks have focused on various angles of the new SECURE Act that was passed in late December. Yes, I know it is surprising since our government can’t agree on much over the last few years, but they managed to get this passed. But did you know, they also passed some tax extenders as part of this bill? They brought back some things that haven’t been on the books in two years. The good news is that they brought many of these things back retroactively (which means that it goes back to when it expired as if it was always the law for the last two years). 

I bet you have no idea what that means. What it means is, there may be an opportunity for you to amend your 2018 individual tax return and additionally get some greater savings on your 2019 individual tax return as well 2020.

So, I bet you're wondering what got affected. Here are the highlights:

•  You can again now use the above-the-line deduction for certain higher education expenses, including qualified tuition and related expenses. This allows you to determine which will give you the greater benefit (tax credit or tax deduction).

•  The change allows for the deduction of mortgage insurance premiums as qualified residence interest. Assuming you were able to itemize in 2018 (or at least you were close), then many people may get a refund just on this item alone.

•  You can now take advantage of the exclusion of qualified canceled mortgage debt income associated with a primary residence. If you were unfortunate enough to have lost your primary residence due to foreclosure (or short sale) in 2018 or 2019, you may now be able to exclude this from your income, assuming you meet the qualifications. This has been a big benefit to many families.

•  They brought back the non-business energy property credit. This applies to qualifying energy efficiency improvements installed in your primary residence. Improvements can include energy-efficient insulation, windows (including skylights), doors, metal roofs, electric heat pump water heater, central A/C, natural gas/propane/oil water heaters, or biomass fuel stoves. The credit can range from $50 to $500 depending on the item you purchase. But please be aware: Many of these items have a lifetime cap, so if you have used it before, then you cannot take it again.

Please note some business provisions were brought back as well, but most of them are very narrow and industry-specific, affecting a very small portion of businesses.

As always, you should consult a tax professional to determine if you are eligible for any of these retroactive benefits and to make sure you file the appropriate forms to claim that refund. Feel free to drop me a line should you have an issue or tax problem. I am happy to help.

Dan Henn is a local certified public accountant. His firm specializes in IRS Collections Representation, taxation of real estate, year-round tax planning and tax preparation in Rockledge. You can contact his office at (321) 684-7800 or at danthetaxman@danhenncpa.com.