In today’s contentious legislative environment in Washington, it’s not often that Congress passes any legislation. Which means when a bill actually is on track to be approved, various members of Congress often tack on a number of other provisions that they wish to see approved as well (either individually, or as part of the negotiated process for a compromise to pass the overall legislation).
Thus was the path of the recent Bipartisan Budget Act of 2018 (H.R. 1892), which was passed into law by President Trump on Friday, February 9th. As while it was intended primarily as the legislation that would avoid a government shutdown by agreeing to increase government spending limits and raising the debt ceiling for two years, buried in the legislation were a number of tax-related provisions – some temporary, and others permanent – with impact for both high-income and low-income households.
Of primary note for financial advisors who work with higher-income individuals is that, starting in 2019, there will be a new IRMAA tier for Medicare Part B premium surcharges for individuals earning more than $500,000 (or married couples with AGI in excess of $750,000), stacked on top of what were additional adjustments to the Medicare premium surcharge tiers that just took effect in 2018 as well!
Also included in the legislation were a number of temporary-but-immediate retroactive reinstatements of popular tax provisions for 2017, including the above-the-line education deduction (for those who weren’t already fully eligible for the American Opportunity or Lifetime Learning Tax Credits), the deductibility of mortgage insurance premiums, and relief from any cancellation-of-debt income for those who go through a short sale with an underwater mortgage on their primary residence.
In addition, the Bipartisan Budget Act of 2018 also provides a number of changes to grant more flexibility for hardship distributions from employer retirement plans, authorizes the creation of a new Form 1040SR (an “E-Z” tax filing form for seniors), and provides a number of retirement-plan-related and other tax relief provisions for those who were impacted by the California wildfires in late 2017!
Which means even though the Bipartisan Budget Act of 2018 was nominally “budget legislation” and not a tax law, a number of households may be impacted by its tax-related changes!
source https://www.kitces.com/blog/bipartisan-budget-act-2018-irmaa-medicare-premium-surcharges-tuition-and-fees-deduction/?utm_source=rss&utm_medium=rss&utm_campaign=bipartisan-budget-act-2018-irmaa-medicare-premium-surcharges-tuition-and-fees-deduction
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