In a vote of 357 to 70, The House of Representatives passed a retroactive 2023 tax package dubbed the Tax Relief for American Families and Workers Act. The bill enjoyed strong bi-partisan support and is now being considered by The Senate.
The package Includes the following…
Increases In Child Tax Credit
The bill doesn’t offer the same increases that we had during the pandemic, but it’s close. It also has increases in the refundable portion of the credit for low income families that will be indexed against inflation for the first time in recent history.
Research & Development Expenses
Under current tax law, R&D Expenses cannot be fully deducted in the year incurred. They must be capitalized and depreciated as 5 year property.
This would correct that problem by allowing them to be deducted in the year incurred. These changes do not affect the existing R&D Credit which can still be completed in conjunction with the new deduction.
Affordable Housing
The package includes a 12.5% allocation increase to the Low Income Housing Tax Credit that expired at the end of 2021. It also reduces from 50% to 30% the amount of private activity bond financing required for the credit.
Interest Deductibility
The bill ends the limits on interest deductible for businesses.
Rapid Depreciation
This allows entities to again use the full Section 179 Rapid Depreciation on certain asset purchases. A portion of this had expired.
This bi-partisan tax bill is primarily funded by ending the Employee Retention Tax Credit. If passed, any ERC requests received by the IRS after January 31, 2023, would be rejected.
This also means that if your ERC was filed timely, it will still be processed.
Let me leave you with this.
Please allow me to repeat a portion of this that’s important. These changes are retroactive to 2023.
This means that if the Senate passes the package and its signed into law by the President, these changes will effect your 2023 Income Tax Returns. As such, there’s no reason for us to forward the returns that I’ve already completed.
They may change at a moments notice. If we made the mistake of filing at this point, they might need to be amended, so it’s smarter to play a wait and see game while holding off at this point.
But wait. There’s more.
Because our fabulous elected officials haven’t complicated our lives quite enough yet, the changes to the 2023 income tax code probably won’t be finished if this bill is signed into law. The only way Mike Johnson, House Speaker, (R., LA.), was able to garner wide-spread support from the GOP Caucus was to promise them a vote on the SALT Limitation next week.
This is the rule that limits the deductibility of your State and Local Tax payments including property taxes as well as the income taxes on our W-2’s and Pass Through Entity Income. The rule prior to this was that we were supposed to get a deduction for all of these taxes.
The current rule limits that deduction to $10,000 annually. Taxpayers in states like Illinois, California, and New York are hurt by this because our property taxes are high. Business owners across the country with pass through entities are also disallowed deductions. This new bill would eliminate the limitation.
All of this means something else. Your tax returns will be later than usual.
Even after they make all of these changes, I’m going to need to wait for software updates before we can get your returns out. Whether or not they’ll extend the due dates is a toss up at this point.
Only whatever God you pray to knows how all of this will ultimately shake out.
Please don’t hesitate in getting us everything we need to complete your returns at least two weeks before the deadline. If you don’t, I can’t promise they’ll be completed timely.
Something tells me that they’re going to make all of these changes and not extend the due dates which is their normal modus operandi. If that happens, I might spend the last couple of weeks before the existing due dates doing nothing but getting out the returns we’ve already completed.
This would put everyone who waited on an extension.
But whatever happens, know that we’re here for you. Our job is to serve.
If you need help, don’t hesitate to contact us.
We’re all going to get through this. Let’s get through it together.
As an inducement, we’re offering 33% off your first six months of bookkeeping and / or the first three months of electronic payroll services on a complimentary basis. In order to claim this benefit, please click on the appropriate button below and provide your contact information. We’d love to help.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
www.SalarySolutions.net
www.AccountingSolutionsLtd.com
Note that the only professional services provided by Accounting Solutions Ltd. are those specified in a written communication from our office detailing the scope of services to be rendered and the terms and conditions applicable to the engagement.