Republican Tax Bill Overhauls Rules Many Were Counting On
- 6 years ago
Republican Tax Bill Overhauls Rules Many Were Counting On
Now, Washington is considering changing those rules as part of a $1.5 trillion tax package moving through Congress, targeting for elimination provisions
that people like Ms. Vause, Mr. Kepley and Mr. Flanagan relied on to make what they believed were financially responsible decisions.
Benjamin Franklin Kepley, 80, a retired Navy surgeon, decided he
and his wife could sell their house in Florida and move into a continuing care retirement community because they could deduct a portion of the cost as a prepaid medical expense.
But the House version does not include a similar caveat for other changes it makes to individual tax deductions,
and most observers expect the deductions for medical expenses, student loan interest, tuition waivers and state and local taxes to go into effect on Jan. 1.
Mr. Kepley said he was initially deterred by the cost, but friends who had already made the move explained
that it was basically an insurance policy against future health problems and that he could deduct some of the fee as a prepaid medical expense.
“But what Congress sometimes tries to do is, if a change is going to affect economic
behavior in a predictable way, then they try to make the change prospective.”
That is the approach the House bill takes to the mortgage interest deduction, which
it proposes capping at $500,000, down from the current limit of $1 million.
WASHINGTON — Before pursuing a doctoral degree in art history, Rachael Vause determined
that a tuition waiver, a $22,500 stipend and the ability to deduct the interest on her previous graduate school loans would allow her to enroll in a four-year program at the University of Delaware.
Now, Washington is considering changing those rules as part of a $1.5 trillion tax package moving through Congress, targeting for elimination provisions
that people like Ms. Vause, Mr. Kepley and Mr. Flanagan relied on to make what they believed were financially responsible decisions.
Benjamin Franklin Kepley, 80, a retired Navy surgeon, decided he
and his wife could sell their house in Florida and move into a continuing care retirement community because they could deduct a portion of the cost as a prepaid medical expense.
But the House version does not include a similar caveat for other changes it makes to individual tax deductions,
and most observers expect the deductions for medical expenses, student loan interest, tuition waivers and state and local taxes to go into effect on Jan. 1.
Mr. Kepley said he was initially deterred by the cost, but friends who had already made the move explained
that it was basically an insurance policy against future health problems and that he could deduct some of the fee as a prepaid medical expense.
“But what Congress sometimes tries to do is, if a change is going to affect economic
behavior in a predictable way, then they try to make the change prospective.”
That is the approach the House bill takes to the mortgage interest deduction, which
it proposes capping at $500,000, down from the current limit of $1 million.
WASHINGTON — Before pursuing a doctoral degree in art history, Rachael Vause determined
that a tuition waiver, a $22,500 stipend and the ability to deduct the interest on her previous graduate school loans would allow her to enroll in a four-year program at the University of Delaware.