Consolidated Appropriations Act contains many provisions, extenders, changes

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The Consolidated Appropriations Act, 2020 signed by President Trump on Dec. 20, 2019, includes many tax provisions which could affect year-end planning. Note the following key points of this Act.

Provisions to be extended through 2020

  • Adjusted gross income floor for medical expenses reduced from 10% to 7.5%
  • Above-the-line tuition and fees deduction
  • Mortgage insurance premium (PMI) deduction as a qualified interest expense
  • Exclusion of income from discharge of qualified principal residence indebtedness income
  • Work opportunity credit (WOTC)
  • Most energy credits, including the 179D – Energy Efficient Commercial Building Deduction

Other items of note

  • Increase in required minimum distribution (RMD) age from 70½ to 72
  • Penalty-free distributions from IRAs for births and adoptions
  • Beneficiaries of IRAs required to withdraw funds within 10 years
  • New kiddie tax is repealed beginning in 2020
  • Three taxes related to the ACA have been repealed: “Cadillac” tax on high cost health plans, medical devices tax and the health insurance fee

Changes to bonus depreciation were not included in this bill. More information will follow in the coming weeks. To read up on the bill, visit https://www.journalofaccountancy.com/news/2019/dec/tax-provisions-new-government-spending-bill-201922651.html