Federal Legislation Tax Update for Early Filers

On January 31, the House overwhelmingly passed H.R 7024, known as the Tax Relief for American Families and Workers Act of 2024. It must now go to the Senate, where its future is a little more uncertain.

In this article, we’re going to talk about (1) how likely it is to pass, (2) what’s in the bill, and (3) what this means for you right now during tax season especially if you’re an early filer.

Will the Bill be passed and become law?

This is a rare bipartisan bill that flew through the house with ease. However, it is not expected to make it through the senate that easily/quickly. From this point, it still would have to go through conference, Senate Committee, pass on the senate floor, and be signed by the President. It is expected to receive a good bit of opposition in the senate, particularly from high-ranking senators that have already promised numerous amendments to the current bill.

A few highlights from the bill in its current form (may change in Senate):

  1. Bonus Depreciation under 168(k) is retroactively adjusted back to 100% for the 2023 tax year.
  2. R&D expensing under Section 174 is restored. (R&D expenses no longer have to be amortized, so R&D credit studies could be back on the table).
  3. Changes to interest expense limitations under 163(j) to allow for an EBITDA-based calculation.
  4. Enhanced Child Tax Credit Provisions.
  5. Expanded Section 179 expensing.
  6. This bill would end ERC filings, as it accelerates the filing deadline from 4/15/24 to 1/31/24.
               a. It also enhances penalties for anyone that “aided or abetted” the filing of any understated tax  liabilities.

There are a few other items in there as well, but these are the ones most applicable to the construction industry.

Why is this important?

If you (a) file your taxes without extending, and (b) are over Section 179 expensing limits, there is a good chance that we may need to extend these returns and finalize them after this bill has worked its way through the senate. Our software will lag a few weeks behind any formal changes in the law, so it is unlikely that these returns would be available for filing before the March 15th deadline.

Furthermore, any ERC claims that have yet to be filed should likely be tabled for the moment until more guidance is issued.

We are continuously keeping an eye on this and will update as we see any movement. Thank you for trusting us with this very important part of your business.

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