Why you might not want to file your taxes early in 2024
Even if you already have all of your tax documents and are thinking of filing your 2023 taxes early in 2024, please consider waiting for a few more weeks if any of the following items apply to you.
As of January 2024, Congress is considering legislation that, if passed, will have the following effects retroactive to tax year 2023:
Child Tax Credit
If the legislation is passed, the refundable portion of the Child Tax Credit would increase from $1,600 to $1,800. Also, taxpayers whose Child Tax Credit is limited because their earned income is beneath the threshold, will have their limited amount of credit multiplied by the number of children claimed.
If you have not had the amount of your Child Tax Credit reduced in previous years due to low earned income or low tax liability, this change would likely not apply to you.
The remaining proposed changes relate to businesses:
Research and experimental (R&E) costs
If the legislation is passed, domestic research and experimental costs will no longer be required to be amortized over a 5-year period, but will be fully deductible in the current year. This change would also be retroactive to tax year 2022. Foreign R&E will still be required to be amortized over a 15-year period.
Bonus depreciation
If the legislation is passed, bonus depreciation will not become limited to 80% in 2023, but will remain at 100%.
Interest expense limitation
If the legislation is passed, interest expense will no longer be limited to 30% of income after depreciation and amortization, but will instead be figured from income before depreciation and amortization, which is a larger amount. This change would also be retroactive to 2022.