Tax law changes….for 2020?
Just when you think you’ve got all your 2023 tax information all neatly buttoned up to pass off to your CPA, the House passed “The Tax Relief for American Families and Workers Act of 2024” by a 357 to 70 vote.
This occurred on January 31, 2024. Not exactly ideal timing since tax filing season for 2024 began on January 29. And as we all know, we’ve got until the April 15 deadline to submit our tax returns.
What Does This Wide-Ranging Change Mean for You & Your Business?
- Increases in child tax credit provisions.
- Increases in depreciation allowances to promote economic innovation, research, and growth.
- Increases in tax relief provisions for losses due to natural disasters, including hurricanes and wildfires.
- Increases in credits for low-income individuals.
- Eliminates the Employee Retention Tax Credit.
- Applies special rules for the taxation of residents of Taiwan who have earned income from the U.S.
And guess what? These extensions can be applied to your former tax return(s) because the bill is retroactive in some cases all the way back to 2020!
Best Laid Plans
“Well, that’s what I get for planning ahead,” you say to yourself. Sometimes the best laid plans just don’t end up the way you intended. And, while Congress is of the mindset that this passage will provide relief and certainty to taxpaying individuals, the hassles associated with such a change which affects the 2023 tax year and earlier is noteworthy when it comes to the documentation and scrutiny of your records for 2023, and retroactive to 2020 potentially.
Yes, individuals, financial advisors and CPAs will be scrambling to dig into applicable records to take advantage of these changes for individuals and businesses alike.
Individual Taxpayers
For individuals, these retroactive tax extensions might require adjustments to tax liabilities, itemized deductions, and tax credits within the 2023 tax year and prior.
Small Businesses
For companies and LLCs, these recently passed retroactive tax extensions have far-reaching consequences for your financial reporting, cash flow management and strategic planning.
Whether you’re an individual taxpayer, or a small business, or both, get ready to roll up your sleeves, because as a taxpayer, you must carefully weed through these complexities because your tax obligations might be reduced (or elevated). If corrections are needed, planning for retirement, approaches to investments, and decisions regarding any charitable contributions can change drastically.
Is Procrastination in Your DNA?
Maybe your mind isn’t in the mood to absorb all this complex new info, or perhaps you’re too busy at work, or possibly you’re in the middle of a big project. There are all sorts of excuses we can make for putting this change on the back burner, but there’s no doubt this bill is extremely broad, and while waiting until the last minute to address how it affects you and/or your business is tempting, it’s really not in your best interest.
Adams Accounting Solutions are friendly experts who will team up with you to stay within the legal and ethical boundaries required by this last-minute decision passed by congress. As well, CPAs at Adams Accounting Solutions will watch out for what’s on the horizon as far as your tax strategies, and financial decisions. Ensure you’re compliant with applicable laws and regulations by giving us a call at 913-888-9100.
