Movement in DC, but....
In a very strong bi-partisan vote (357-70), the House of Representatives has passed the Widen-Smith Tax Bill that includes some important changes for some of our clients including:
- Enhancing the Child Tax Credit ($ amount and eligibility)
- Retaining 100% bonus depreciation for 2023 (was previously set to reduce to 80%)
- Terminating the ERC program early (this is the largest component that pays for the above items and other parts of the tax bill)
It is important to note this law has to pass a vote in the Senate and that may not be as "easy" especially in an election year and with government funding deadlines approaching. In particular, the Senate has indicated they may push back on the fact the House bill did not increase the SALT (State and Local Tax) deduction fom the current $10,000 limit (the suggested increase is to $20,000). Most experts are predicting final legislation, if passed at all, will not be approved by the President until early March.
Having potential legislation like this pass in the midst of the current tax season is not ideal. For some clients, it may be advisable to delay filing your 2023 returns (business and/or personal) if these items impact you. In addition, you may want to consider filing an extension. The other option is to file when you are ready and then, if the legislation later passes, be ready to file an amendment. There is also the potential that the IRS may automatically adjust for some aspects of the legislation (like the enhanced child credit) if the taxpayer files before the legislation is finalized. However, there is no guarantee the IRS will take this approach.
Bottom line, it is hard to guess what will happen in Washington these days so there are no firm answers on this one yet. We want you to know that we are on top of it and will keep you informed as more information becomes available.
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