The Bipartisan Budget Act of 2018, enacted on Feb. 9, retroactively renewed for tax year 2017 a number of tax extenders that expired at the end of 2016. In order for taxpayer to claim the benefits, the IRS has had to reprogram its processing systems.
On Feb. 22, the IRS announced that it is ready to process 2017 returns claiming the following:
- Exclusion from gross income of discharge of qualified principal residence indebtedness (often, foreclosure-related debt forgiveness).
- The mortgage insurance premiums treated as qualified residence interest.
- Deduction for qualified tuition and related expenses.
In the coming weeks, the IRS will work closely with tax professionals and the tax-preparation industry to ensure that software processes can accommodate the new provisions. The IRS emphasized that filing electronic returns is the best way to ensure that returns are processed accurately and refunds are properly issued.
The IRS will also continue to update its systems to handle returns claiming the other tax benefits extended by the Bipartisan Budget Act, though many of these benefits impact a smaller number of taxpayers. The IRS noted that taxpayers eligible for these benefits can file an amended return once systems are fully updated.