Top Stories
Top Stories
Personal Finance

These three tax breaks for 2018 are still up in the air

Key Points
  • Elected officials must clear a package of breaks in order for you to claim them on your 2018 taxes.
  • These so-called tax extenders include deductions for mortgage insurance and college tuition and fees.
  • You can either wait to file, or you can submit your Form 1040 to the IRS now and file an amended return later if these breaks are renewed.
The Internal Revenue Services offices in Washington, D.C.
Adam Jeffery | CNBC

As if tensions weren't running high enough in Washington, Congress has another battle on its hands: renewing a package of breaks for the 2018 tax year.

Say hello to the "tax extenders, " a series of temporary provisions in the code that have expired and must be reauthorized by elected officials retroactively each year in order for taxpayers to use them.

VIDEO1:0501:05
Here are your income tax changes for 2019

These extenders run the gamut: Previously, they have included write-offs on racehorses and motorsports complexes.

"At this moment, I would expect that an agreement is reached on the tax extenders package," said Nicole Kaeding, director of federal projects at the Tax Foundation.

"There seems to be interest in both chambers and relevant committees to get this done, but now the question is one of timing," she said.

You can't claim the extenders if they aren't passed.
Kathy Pickering
executive director of The Tax Institute at H&R Block.

Kaeding expects Congress to address the extenders in an upcoming government funding bill.

Taxpayers could be in for a headache if Congress doesn't renew the tax breaks.

"You can't claim the extenders if they aren't passed," said Kathy Pickering, executive director of The Tax Institute at H&R Block. Sure enough, the 2018 individual income tax return — Form 1040 — doesn't have any line items for the extenders.

If Congress were to pass a measure allowing the breaks for 2018, the IRS would have to revise the 1040 and tax prep software providers will have to update their programs to reflect it, said Kaeding.

VIDEO2:1402:14
Big earners in high-tax states are fleeing to Florida, WSJ reports

What do you do if you're trying to rush your return out the door and you need certainty?

"You could either do nothing, and if the law changes, file an amended return," said Tim Steffen, CPA and director of advanced planning at Robert W. Baird & Co. "Or you can wait a month or two and see if something changes."

Here are three big extenders that are still undecided for 2018.

Mortgage insurance
Photo by Gary Burchell via Getty Images

For the 2018 tax year, homeowners who itemize deductions on their tax return could deduct the interest on their mortgage and home equity loan or line of credit — up to $750,000 in total qualified residence loans.

The debt must go toward buying, building or substantially improving your dwelling in order to qualify for the interest deduction.

The private mortgage insurance tax extender allows you to deduct your mortgage insurance premiums as well.

Mortgage insurance premiums are an additional cost you pay each month if your original down payment generally is less than 20 percent of the sales price.

Debt forgiveness on foreclosure
fstop123 | Getty Images

Maybe your home was foreclosed in 2018 or you got rid of your dwelling in a so-called short-sale.

If your lender canceled or forgave the loan on your principal residence as a result, there's a tax extender that allows you to exclude up to $2 million (if married) from your gross income for the discharge of the debt.

Normally, the canceled debt is treated as income and subject to taxes, but this break offers some relief.

Tuition and fees for higher education
Image source: John Giustina | Iconica | Getty Images

Have a child in college?

Higher-education tuition costs and other related expenses of up to $4,000 a year could be deducted. What's more, this is an above-the-line deduction, meaning you don't have to itemize on your taxes to get it.

More from Personal Finance
Medicare for All could take center stage in 2020. What it means
Forget the calories. Eating out can fatten your credit card rewards
This hidden factor could raise the cost of saving for college

Subscribe to CNBC on YouTube.