@Rbjcc24 wrote:
Looking at the IRS guidance it looks like they are using the term modified adjusted gross income despite the bill simply stating adjusted gross income. This would imply certain above-the-line deductions not being allowed to calculate your AGI for this exemption. That being said, the specific instructions seem to allow for the traditional above-the-line deductions (i.e. student loan interest) to your gross income when making a determination if you are below the $150,000 cap. Am I reading this right?
There are several issues the IRS must address before this can be implemented that Congress did not address. Simply subtracting the amount on schedule 1 has other consequences - it can change the amount of EIC, the amount of allowable IRA contributions and probably several other things.
For example: is EIC to be calculated before or after applying the exclusion? If before, then that will require extensive changes to the EIC forms and software as well. Same for IRA's and probably several others.
As of now the IRS has not given any guidance on the other unintended consequences.
This is not as simple as it sounds.
(The last time Congress made a retroactive change it took several months to implement, requiring extensions to be filed.)
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
