The Taxing Task of Tracking Taxes

“The only difference between death and taxes is that death doesn’t get worse every time Congress meets.”  – Will Rogers

The legendary American humorist sure hit the nail on the head with that quip. Even though he spoke those words about 100 years ago, they still ring true today.

Tax Day is coming up April 15, so many of us are thinking about paying personal income tax, or maybe getting a refund from the Internal Revenue Service (IRS). When I first entered the workforce as a grocery bagger in high school, I wondered why adults groused about the complexity of tax forms. For me, a few minutes filling in the 1040 EZ form and I was on my way to getting a small refund back. Super easy!

Of course, as I got older, got married, had children, bought a house, the tax forms got longer, and my wife and I spent more and more time on our tax filings. So now that we’ve paid taxes based on similar circumstances the last few years, it should be easy to file that tax return again this year, right?

Well…not quite. Tax laws are constantly changing. That state and local tax (SALT) deduction we used to take was reduced by the Tax Cuts and Jobs Act of 2017 (TCJA). Those standard withholdings based on your exemptions changed too, and many working Americans got a rude awakening when it changed and found they owed tax instead of getting a refund like years past.

Things are changing yet again for the affordable housing industry as well. In this issue, we’re looking at tax topics in 2021, and there is a lot to explore. There’s the new four percent floor fix for the Low Income Housing Tax Credit (LIHTC), changed by Congress in their flurry of 2020 year-end budget and COVID relief legislation. Tax attorneys and certified public accountants are starting to grasp the changes but also are asking a lot of questions about how it all plays out in the real world. As staff writer Mark Fogarty reports in this issue, some tax professionals think they may not get concrete answers from the IRS until the deadline for amended filings this fall.

There were more changes from the Consolidated Appropriations Act (CAA), which tried to fix the TCJA’s reduction on business interest deductions. That change had a big effect on residential rental properties, and CAA may allow them to file for refunds in 2018-19, as well as avoid losing future interest deductions, according to a recent analysis by the tax law whizzes at Nixon Peabody. You can read more about this change from staff writer Scott Beyer in this issue.

As much as taxes are a certainty in life, it’s also certain that tax laws are constantly evolving. It’s likely more changes to tax laws are coming as control of the White House and Congress changes hands. There is already talk about the next steps Congress should take to increase affordable housing production, and more ideas surely will be coming.

While you make your way through all these changes, keep your copy of Tax Credit Advisor handy. We’ll be here to help you make sense of it all.

Paul Connolly
Executive Editor

Tax Credit Advisor welcomes reader comments. Contact the executive editor at pconnolly@dworbell.com.