Lee B Posted January 14 Report Share Posted January 14 This increase is part of the potential agreement for another Continuing Resolution to avert the looming government shutdown on January 19. "If Congress reaches a deal on the child tax credit by Jan. 29, lawmakers say eligible families could benefit as soon as next month. That’s because the credit would be available for the 2023 tax year (for tax returns filed early in 2024). However, the expansion, if it does happen, won’t reach as far as it did under President Joe Biden’s American Rescue Plan. Here are some of the possibilities Congress is discussing: Ensuring families with the lowest incomes will qualify for the credit by removing the minimum taxable income threshold Allowing families to submit prior year tax returns to claim the expanded credit Increasing the refundable portion of the child tax credit None of the above possibilities are official, and the details could change as Congress continues to discuss the matter. However, families with the lowest incomes would likely benefit the most." Just what we need another last second change in tax law 1 2 Quote Link to comment Share on other sites More sharing options...
Lee B Posted January 16 Author Report Share Posted January 16 "WASHINGTON — Senior lawmakers in Congress announced a bipartisan deal Tuesday to expand the child tax credit and provide a series of tax breaks for businesses." "The deal, would enhance refundable child tax credits in an attempt to provide relief to families that are struggling financially and those with multiple children. It would also lift the tax credit's $1,600 refundable cap and adjust it for inflation." "The deal includes expensing for research and experimental costs, restoration of an earlier interest deduction, an expansion of small-business expensing and an extension of bonus depreciation, according to a section-by-section summary released by the two tax-writing committees." Quote Link to comment Share on other sites More sharing options...
Lee B Posted January 20 Author Report Share Posted January 20 On 1/16/2024 at 12:30 PM, Lee B said: "WASHINGTON — Senior lawmakers in Congress announced a bipartisan deal Tuesday to expand the child tax credit and provide a series of tax breaks for businesses." "The deal, would enhance refundable child tax credits in an attempt to provide relief to families that are struggling financially and those with multiple children. It would also lift the tax credit's $1,600 refundable cap and adjust it for inflation." "The deal includes expensing for research and experimental costs, restoration of an earlier interest deduction, an expansion of small-business expensing and an extension of bonus depreciation, according to a section-by-section summary released by the two tax-writing committees." Today this bill was passed by the House Ways and Means Committee by a vote of 40 - 3. Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted January 20 Report Share Posted January 20 Are the bonus depreciation changes retro to 2023 as well? We were supposed to go to 80%. Tom Longview, TX Quote Link to comment Share on other sites More sharing options...
Lee B Posted January 20 Author Report Share Posted January 20 https://www.wolterskluwer.com/en/expert-insights/tax-relief-for-american-families-and-workers-act-of-2024 Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted January 22 Report Share Posted January 22 The 5 year amortization of R&D costs is pushed out in that bill as well. Wonder if Apple and some of the other giant tech companies and drug companies are lobbying hard in an election year for these changes. I am sure they will take this all the way to Jan 28th which for some dumb reason congress thinks is the deadline for getting these provisions into the tax code giving the IRS 1 day to update their computers and the software companies 1 day to update so e-file can start on the 29th. Dumb and Dumber in Washington DC... And I was so looking forward to a "normal" tax season this year. But I guess I got it because there is no "normal" anymore so "not normal" is the new normal. Tom Longview, TX 5 Quote Link to comment Share on other sites More sharing options...
GLJEANNE Posted January 22 Report Share Posted January 22 So frustrating to have this come up at the last minute, since the folks the child tax credit will help are the the ones who like to file right away, because they need the refunds. 5 Quote Link to comment Share on other sites More sharing options...
Medlin Software, Dennis Posted January 22 Report Share Posted January 22 2 hours ago, GLJEANNE said: So frustrating to have this come up at the last minute, since the folks the child tax credit will help are the the ones who like to file right away, because they need the refunds. Indeed. Catch-22. File when open, then pay to amend (or whatever it may require to get any additional amount), or wait for the process to work through the system. For those who have enough income to require withholding, it is another reason one should manage their withholding to owe just under 1k every single year (or whatever the allowable amount is to avoid penalty). For those with no actual liability, they are stuck with the games we allow others to play to get our votes. Here it is 2023, and this mornings first waiting message was from someone who is dealing with employees griping about under withholding. We all know what happened in 2020, or should, and yet, there are many who do not pay attention to their withholding until their "IRS savings club" wants money instead of sending a large check. 1 Quote Link to comment Share on other sites More sharing options...
Lee B Posted January 22 Author Report Share Posted January 22 If this bill becomes law, hopefully the IRS will handle it like they handled the early filers with Unemployment Compensation in their returns several years ago. The IRS did not require amendments and the IRS handled the tax recalculations internally and refunded the tax overpayments in the late summer and early fall of that year. 2 Quote Link to comment Share on other sites More sharing options...
kathyc2 Posted January 22 Report Share Posted January 22 2 hours ago, GLJEANNE said: So frustrating to have this come up at the last minute, since the folks the child tax credit will help are the the ones who like to file right away, because they need the refunds. Even if passed, it won't affect the majority of returns with CTC. Only those that have the refundable part limited due to income or maxing out the 1,400 https://gop-waysandmeans.house.gov/wp-content/uploads/2024/01/BILLS-118hr7024ih.pdf 3 Quote Link to comment Share on other sites More sharing options...
Medlin Software, Dennis Posted January 22 Report Share Posted January 22 Just now, kathyc2 said: Even if passed, it won't affect the majority of returns with CTC. Only those that have the refundable part limited due to income or maxing out the 1,400 refundable amount. chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://gop-waysandmeans.house.gov/wp-content/uploads/2024/01/BILLS-118hr7024ih.pdf The ones who are likely scraping by, or trying to get to the scrape by level... Quote Link to comment Share on other sites More sharing options...
kathyc2 Posted January 22 Report Share Posted January 22 Just now, Medlin Software, Dennis said: The ones who are likely scraping by, or trying to get to the scrape by level... Simply pointing out that we don't need to hold all returns with CTC waiting to see if it passes or not... Quote Link to comment Share on other sites More sharing options...
Medlin Software, Dennis Posted January 22 Report Share Posted January 22 Just now, kathyc2 said: Simply pointing out that we don't need to hold all returns with CTC waiting to see if it passes or not... (We keep certain things from being posted here.) We are all to blame for yet more games. Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted January 22 Report Share Posted January 22 I keep reading articles that says that Congress will "pay" for these credits and deductions by pulling money from the ERC program. I wonder what that will entail? Deny all claims? Put a shut off date for claims in place? Audit the ones already completed and try to claw back? Something else? Tom Longview, TX 1 Quote Link to comment Share on other sites More sharing options...
Medlin Software, Dennis Posted January 22 Report Share Posted January 22 8 minutes ago, BulldogTom said: I keep reading articles that says that Congress will "pay" for these credits and deductions by pulling money from the ERC program. I wonder what that will entail? Deny all claims? Put a shut off date for claims in place? Audit the ones already completed and try to claw back? Something else? Tom Longview, TX IIRC, the last Q of ERC was clawed back, after the fact, so what you mention would not be a first. While I have enjoyed a certain "sport" my entire life, redirecting ERC to fund rebuilding dormant facilities was an awful look. I suspect it is not so much as stopping valid claims, but using the money allocated for ERC, which was unused, either by lack of interest/follow through, or by stepped up enforcement on the "commercial get your ERC money here" claims. For instance, certain tribes are still allocating funds from the pandemic (after receiving said funds a year or more later than the other programs were funded). Some of the remaining tribal funds are simply unclaimed funds which likely have to be used or returned. Quote Link to comment Share on other sites More sharing options...
Lee B Posted January 22 Author Report Share Posted January 22 Copied from the website of Current Federal Tax Developments: "Tax Relief for Working Families This title encompasses provisions aimed at expanding the refundable portion of the Child Tax Credit, as specified in IRC §24. The following changes would be made to the Child Tax Credit under the bill. Per-Child Basis Calculation of Maximum Child Tax Credit. The maximum amount of the child tax credit that can be refunded would be determined by multiplying the earned income of the taxpayer exceeding $2,500 by 15% and then multiplying that result by the number of qualifying children. At present, the number of qualifying children does not affect the calculation of the maximum refundable child tax credit. This provision would be in effect from 2023 to 2025. [Act Section 101] Aggregate Restriction for Refundable Child Tax Credit: In addition to the aforementioned cap, the maximum reimbursable child tax credit is further bounded by a fixed monetary sum per child, which is currently set at $1,600 per child, as per the existing law. The bill proposes to elevate the maximum reimbursable amount per child to $1,800 for 2023, $1,900 for 2024, and $2,000 in 2025, along with an inflation modification for 2024 and 2025. [Act Section 102] Inflation Adjustment. The amount of the child tax credit, which is currently set at $2,000, would be indexed to inflation for the years 2024 and 2025, with the result rounded down to the nearest $100. [Act Section 103] Election to Use Prior Year’s Earned Income. Taxpayers will have the opportunity to participate in an election in 2024 and 2025 to utilize the earned income from the preceding year when calculating the child tax credit. This election is available if the taxpayer’s earned income in the current year is lower than the earned income in the previous year. [Act Section 104] IRS to Attempt to Automatically Issue Refunds to Early 2023 Filers. The implementation of these proposed legislative amendments, should they be enacted, would occur, at best, several weeks into the year 2024. Consequently, a substantial number of taxpayers, particularly those anticipating a tax refund, will likely file their tax returns before the Internal Revenue Service (IRS) is prepared to process returns claiming the revised Child Tax Credit. In order to address this issue, Section 105 of the Act stipulates that, to the greatest extent feasible, the IRS must recalculate the Child Tax Credit based on the aforementioned amendments and any information provided by the taxpayer. In the event that this recalculation results in a refund, the agency is obligated to issue said refund or credit as expeditiously as possible." 1 1 Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted January 23 Report Share Posted January 23 If, BIG IF, this bill passes, looks like ERC claims will be shut down on 1/31/2024. Statute of limitations will be extended on all ERC claims. Tom Longview, TX 2 Quote Link to comment Share on other sites More sharing options...
Lee B Posted January 31 Author Report Share Posted January 31 This bill was scheduled for a vote in The House this week. Now it's been held up by Republican House members from New York who want the $10,000 SALT cap increased. Quote Link to comment Share on other sites More sharing options...
Medlin Software, Dennis Posted January 31 Report Share Posted January 31 13 minutes ago, Lee B said: This bill was scheduled for a vote in The House this week. Now it's been held up by Republican House members from New York who want the $10,000 SALT cap increased. Ugh. Scratch my back at its worst. Quote Link to comment Share on other sites More sharing options...
Randall Posted January 31 Report Share Posted January 31 Just to confirm, it will not affect those who get the non-refundable credit, max $2000. Is this correct? I have a few early returns getting the full $2000 as non-refundable credit. My understanding is that this pending bill would affect the refundable credit. Quote Link to comment Share on other sites More sharing options...
Lion EA Posted January 31 Report Share Posted January 31 Doesn't it change how much of the credit is refundable? Does it look like Congress will vote soon? You might want to wait a week. Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted January 31 Report Share Posted January 31 House is set to vote tonight at 8PM eastern. Toss up as to if it will pass. Senate is a toss up as well if it passes the house. Don't forget any of your Businesses that have R&D costs are affected as well. I am going to be sitting on one because I don't know if the R&D costs can be deducted or have to be amortized over 5 years. Also affects bonus depreciation for your business returns. I think that will apply to rentals as well for new business property installed in 2023 (stoves, refrigerators, etc) So, if you have any business returns or any individual returns with dependent children or rentals, you need to consider when to file. Tom Longview, TX Quote Link to comment Share on other sites More sharing options...
Randall Posted January 31 Report Share Posted January 31 1 hour ago, Lion EA said: Doesn't it change how much of the credit is refundable? Does it look like Congress will vote soon? You might want to wait a week. I thought if they got the full credit ($2000) as nonrefundable, just a deduction of their tax, this pending bill would not affect it. Only if they got a refundable credit. Quote Link to comment Share on other sites More sharing options...
Medlin Software, Dennis Posted January 31 Report Share Posted January 31 No telling what, if anything, gets passed. The advice of file when ready is likely the best. If something comes later with more bene, the IRS will likely send payment. Quote Link to comment Share on other sites More sharing options...
kathyc2 Posted January 31 Report Share Posted January 31 13 minutes ago, Randall said: I thought if they got the full credit ($2000) as nonrefundable, just a deduction of their tax, this pending bill would not affect it. Only if they got a refundable credit. You are correct. If they have enough tax liability to absorb the CTC, this bill will not effect them. The inflation adjustment as written does not come into play for 2023. 1 Quote Link to comment Share on other sites More sharing options...
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