January 24, 2024
Hey everyone, let’s talk about something that’s been making waves in the world of taxes – the Tax Relief for Workers and Families Act. Recently pushed forward by the House Ways and Means Committee, this bill is shaking things up as we get ready for tax season. It’s a big deal because it’s bringing back some much-missed tax breaks, like a beefed-up Child Tax Credit, new deductions for research and development in the first year, a full-on bonus depreciation, and some great improvements to the Low-Income Housing Tax Credit. Basically, it’s a lot of changes that could put more money back in our pockets (Cohn, M., 2024).
Right now, though, there’s a bit of a hold-up. The bill’s worth a whopping $78 billion, but there’s some back-and-forth over things like whether to remove the $10,000 cap on state and local tax deductions. This cap has been around since the Tax Cuts and Jobs Act of 2017, and let’s not forget the debate over how the Child Tax Credit payments should be handled. Despite these hiccups, fingers are crossed that these issues get ironed out in the final version of the bill (Cohn, M., 2024).
Here’s something interesting about this bill: how it’s being paid for. Instead of the usual ways, it’s mainly funded by ending the Employee Retention Credit and cracking down on fraudulent claims. It seems like lawmakers are really thinking about the federal deficit and budget stuff (Cohn, M., 2024).
The IRS is also stepping up. They’re rolling out a voluntary disclosure program for the Employee Retention Credit. This is a big deal because it gives taxpayers a chance to fix any mistakes with their claims without facing severe penalties. It’s a nod from the IRS, showing they understand how complicated taxes can be (Cohn, M., 2024).
So, what’s this going to mean for businesses and individual taxpayers like us? Well, the effects are going to be pretty big. A lot of people are waiting for these tax breaks to come back, and some are even retroactive. This could mean some headaches in fixing up past returns and figuring out the new rules.
The IRS is also in for a tough season. They’ve got to handle everything this bill brings, along with ongoing ERC claims, and there’s talk about their funding being in jeopardy. Last tax season went smoothly thanks to a funding boost from the Inflation Reduction Act, but this year might be a different story with these new challenges.
In short, the Tax Relief for Workers and Families Act is a game-changer in U.S. tax policy. Its effects will ripple beyond just this tax season, potentially reshaping the financial scene for businesses and families. It’s more important than ever for us to stay on top of these changes and be ready for what’s coming.
References:
Cohn, M. (2024, January 24). Tax extenders bill throws new uncertainty into tax season. Accounting Today. Retrieved January 24, 2024, from AccountingToday.com