As the IRS gets ready to open the 2024 tax filing season on January 29, 2024, the Tax Relief for American Families and Workers Act of 2024 has yet to pass the House and Senate. The Act contains retroactive tax provisions that could significantly impact taxpayer’s 2023 income tax return. Below are some key takeaways from The Act:

  • Child Tax Credit – The Act expands the refundable portion of the child tax credit, by increasing from $1,600 to $1,800 starting in the year 2023. The nonrefundable portion of $2,000 will remain the same, along with income phase out ($400,000 for married filing joint filers).
  • Research and Development Expenses – The Act would delay the requirement to amortize research and experimental expenditures paid or incurred until after December 31, 2025. Current law states that expenditures paid or incurred after December 31, 2021 are required to be amortized over five years, or fifteen years if expenditures attributable to outside of the United States.
  • Bonus Depreciation – The Act would extend 100% bonus depreciation to qualifying property placed into service prior to January 1, 2026. The current law allows 80% deduction for 2023, 60% for 2024, 40% for 2025, and 20% for 2026.
  • Employee Retention Tax Credit – Due to the overwhelming amount of fraudulent ERTC claims, The Act would terminate the period for making claims for the ERTC on January 31, 2024.
  • New 1099-MISC and 1099-NEC Filing Thresholds – The Act would adjust the threshold of filing Form 1099-MISC or 1099-NEC from $600 to $1,000 for payments made after December 31, 2023. After 2024, the threshold would be adjusted for inflation.

The Act does have bipartisan support, but it is very unlikely that The Act will be signed into law prior to the tax filing season beginning. The IRS is warning that this could cause an issue with processing tax returns in a timely manner.

Should you have any questions or concerns about The Tax Relief for American Families and Workers Act of 2024, please do not hesitate to contact one of our trusted tax advisors.