2023 Tax Season News: Tax Updates
Tax season is here! At Brannen CPA Services, we provide creative solutions to traditional tax and accounting services that are always client-centered. You can always count on us to provide honest advice and relevant insights. To help you prepare for tax season this year, we wanted to share some recent tax updates. In January, the House passed a bipartisan bill - the Tax Relief for American Families and Workers Act of 2024. This bill includes an expansion to the Child Tax Credit and a number of business incentives. While the bill still needs to get to the Senate, it is likely to pass. Many of the provisions proposed can be applied retroactively to your 2023 taxes. Here’s what you need to know as you gather and send documentation we need to prepare your taxes.
The Child Tax Credit
Under the new legislation, this widely used tax credit will have a proposed three-year expansion, including for the 2023 tax season. Currently, the tax credit is $2,000 per child for families that meet the income threshold, but only up to $1,600 of that credit is refundable. Under the proposed law, the expansion of the credit would incrementally increase the maximum refundable amount as follows:
● $1,800 per child in 2023
● $1,900 per child in 2024
● $2,000 per child in 2025
Additionally, the Child Tax Credit will be adjusted for inflation in 2024 and 2025 and
there will be adjustments in the rules for determining earned income. These changes are similar to what was implemented during the 2021 tax season with the American Rescue Plan Act.
Business Incentives
This new bill will also extend some provisions from the Tax Cuts and Jobs Act of 2017, delay other provisions, and expand some long-standing deductions for businesses. Here is a list of the proposed business tax credits:
● Research and Experimental Expenses
● Business Interest Limitation
● Bonus Depreciation
● Increased 179 Deduction
Employee Retention Tax Credit
The above provisions are paid for largely through changes to the Employee Retention Tax Credit (ERTC). The ERTC started during the pandemic as a way to provide a credit against certain payroll taxes for businesses that retained employees during lockdowns. The IRS has become aware of a high number of fraud cases and the new bill proposes a number of measures to combat these claims and terminate the period for making claims for the ERTC on January 31, 2024.
How will these changes impact your 2023 tax filing? Please don’t hesitate to reach out with questions or to schedule an appointment. Our goal at Brannen CPA Services is to help our clients thrive, from individuals to small businesses. We are dedicated to providing each and every client with the attention they deserve and the highest level of professional service. Give us a call at 207.271.9600. We’re here to help you rediscover the strength in your numbers!
