IRS: Amend returns to claim 2018 extenders


The IRS issued a news release (IR-2020-04) on Feb. 26 confirming that taxpayers must generally file amended returns to claim most tax benefits renewed retroactively for 2018. The IRS is currently working to update 2018 forms to allow for amended claims, but provided no timetable for when the forms would be ready.

Legislation passed at the end of 2019 retroactively reinstated many of the “extender” tax provisions that had expired at the end of 2017 (see our Tax Legislative Update for more information on the bill). Most of these provisions were extended both retroactively for 2018 and 2019 and prospectively for 2020. Major businesses provisions that were reinstated for include:

  • The biodiesel and alternative fuel tax credits
  • The railroad track maintenance credit (extended through 2022)
  • The Section 45L credit for energy-efficient new homes
  • The Section 25C for energy-efficient home improvement
  • The Section 179D deduction for energy-efficient commercial building property
  • The Indian employment tax credit under Section 45A
  • The three-year depreciation for racehorses
  • The seven-year cost recovery for motor-sports entertainment complexes
  • The special expensing for film and television and live theatrical productions

Major individual provisions that were reinstated include:

  • The above-the-line deduction for qualified tuition and fees
  • The deduction for mortgage insurance premiums
  • The exclusion for principal residence debt forgiveness income
  • The reduction in medical expense deduction floor

The legislative language required the IRS to offer expedited procedures for claiming many of the fuel excise tax credits (see our story, “IRS offers expedited fuel tax credit refunds” for these procedures). In addition, existing rules allow taxpayers in some circumstances to claim certain retroactive 2018 depreciation deductions, such as Section 179D, on 2019 returns with a change in method of accounting on Form 3115. But many taxpayer were unsure whether the IRS would offer any additional administrative relief to allow taxpayers to claim other 2018 incentives without needing to amend 2018 returns.

The release confirms that taxpayers must generally file amended returns to claim other benefits renewed for 2018. The release indicates that 2018 forms “are being revised to reflect legislation,” but offered no definitive timeframe for when updated forms would be available. Most 2019 forms have already been updated, and the IRS news release also offered information for electing the alternative application of the “Kiddie Tax” regime for 2019 and details on relief available to taxpayers affected by federally declared disasters.



The ‘Kiddie Tax’


The legislation reversed a change to the Kiddie Tax made by the Tax Cuts and Jobs Act, which required a child’s unearned income to be taxed at trust rates instead of the parents’ rates. The change is generally effective beginning in 2020, but taxpayers can elect to apply it for 2018 and 2019. The original TCJA provision was moderately helpful to some high-income taxpayers because the trust brackets allowed more capital gains and dividends to be taxed at the zero and 15% rates. But it was unfavorable for many children of lower-income taxpayers, particularly those receiving survival benefits or scholarships.

For the 2019 tax year, taxpayers can make the election by completing Form 8615 and including a statement specifying “election to modify tax of unearned income” with their return. More information is available in the Instructions for Form 8615 under Part II Tax. Taxpayers seeking relief for 2018 must wait for the IRS to release updated forms to amend their returns.



Next steps


Taxpayers may claim most 2019 incentives as usual on their 2019 returns. Taxpayers with fuel tax credit claims for 2018 and 2019 should assess whether they qualify for expedited procedures for immediate refunds. Taxpayers making retroactive 2018 depreciation changes should evaluate whether any of the benefits can be claimed with an accounting method change on the 2019 return. Taxpayers qualifying for other 2018 benefits should monitor IRS releases to file an amended return when 2018 forms are updated.


To learn more visit




Tax professional standards statement

This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.


More flash