Are some of your deductions dying?
Here are some that won’t be around after December 31 of 2016.
Tuition-and-fees deduction: In lieu of claiming one of the higher education tax credits, you can deduct tuition and fees paid to a college. The deduction is limited to either $2,000 or $4,000, depending on modified adjusted gross income (MAGI), but it’s completely phased out for higher-income taxpayers. Note that qualified expenses paid in 2016 for the next semester in 2017 are generally deductible on 2016 returns.
Residential energy credit: This is the home energy credit that most taxpayers are familiar with. It is generally equal to 10% of the cost of qualified energy-saving improvements installed in a principal residence (but not second homes). However, there’s a lifetime limit of $500 credit and separate dollar limits on certain types of expenses.
Residential energy-property credit: This lesser-known energy credit is equal to 30% of the cost of renewable energy source installments in your home. You can claim this credit for a new home or a primary residence, but you must be the homeowner. In other words, tenants can’t claim the credit.
Alternative motor vehicle tax credit: A credit is available if you buy a new full-cell motor vehicle (i.e., a vehicle powered by cells converting energy into electricity). Credit amounts depend on the make and model of the vehicle. What’s more, you must be the original owner – lessees and used car buyers aren’t eligible.
Plug-in vehicle credit: Yet another credit can be claimed by original purchasers of qualified plug-in electric-drive motor vehicles. These vehicles run by an electric motor and draw electricity from a rechargeable battery. Credit amounts vary according to make and model.
Mortgage insurance premiums: A taxpayer may deduct mortgage insurance premiums paid on a qualified residence, subject to a phaseout beginning at $100,000 of AGI. The insurance is effectively treated as deductible mortgage interest on your 2016 tax return.
Mortgage debt forgiveness: Finally, the PATH Act extended the tax exclusion for mortgage debt forgiveness through 2016. Under this provision, there is no tax due on the cancellation of up to $2 million of debt on a principal residence.