Hold off on filing taxes — there are two breaks that could be introduced before Tax Day
Taxpayers may want to delay filing their returns closer to the April 15 deadline as Congress negotiates a $100 billion bill that could offer breaks to both parents and businesses, experts said.
The bipartisan group, led by Senate Finance Committee Chairman Ron Wyden (D-Ore.) and House Ways and Means Committee Chairman Jason Smith (R-Mo.), is wrangling over restoring some of Donald Trump’s tax cuts in exchange for expanding the child tax credit, according to The Washington Post, which cited people familiar with the talks.
Though Democratic lawmakers aren’t thrilled to restore tax breaks prized by Republicans — like bonus depreciation, research-and-development expensing and the net interest deduction — they’re willing to compromise in order to expand the child tax credit, per the outlet.
James Mohs, an associate professor of accounting and taxation from the University of New Haven, told The Post: “What I would do is hold off until February [to file taxes] to see what’s going to come out.”
“You always want to take benefits, deductions, credits and everything else into account. What’s going to benefit you the most? Whether benefits stay or not is another story.”
In 2021, Democrats temporarily boosted the child tax credit from $2,000 to $3,600 a year per child.
The expanded credit lapsed the following year due to pushback from Republicans.
Wyden and Smith haven’t determined how much revenue they’ll raise to pay for the bill — or where they’ll find the money, according to The Washington Post.
One possibility, the outlet reported, could be ending the employee retention tax credit, a pandemic-era incentive for businesses to keep workers on their payrolls.
The lawmakers also haven’t decided on whether they’ll try to pass any deal they strike on its own or attach it to a larger must-pass bill.
Either way, Wyden and Smith must make a decision by the end of the month if the bill is going to apply to this year’s tax-filing deadline.
“Discussions are ongoing and we’re continuing to make progress,” Wyden’s spokesperson, Ryan Carey, wrote in an email to The Washington Post. “There’s optimism on all sides, and the goal remains to get this done in time for changes in the child tax credit to take effect in this upcoming filing season.”
Meanwhile, the IRS in November implemented new federal income tax brackets for 2024, which adjusted earnings thresholds for each tier roughly 5.4% for inflation.
For 2024, the standard deduction also increased with inflation in mind, rising for single filers from $13,850 in 2023 to $14,600 in 2024.
Married couples filing jointly may claim $29,200, up from $27,700.
The change could reduce taxable income for some filers, though it won’t be implemented until next year, for 2024 earnings, and depends on paycheck withholdings.
Filers can expect a refund when they’ve overpaid, or a tax bill when they haven’t paid enough.
