What You Need to Know About The Tax Relief for American Families and Workers Act of 2024

Feb 9, 2024Individual Tax, Business Tax0 comments

What You Need to Know About The Tax Relief for American Families and Workers Act of 2024

The U.S. House of Representatives has passed a proposed bill called “The Tax Relief for American Families and Workers Act of 2024” (the Act). The bill aims to make changes to tax-related matters and is now under consideration by the Senate.

How Does This Apply to You?

This bill impacts businesses and individuals through changes in tax policies aimed to provide relief and support. Business owners are expected to benefit through the expansion of deductions along with other changes. For individuals with children, they may benefit from a higher refundable amounts per child. Read on to discover what some of the items the Act may have in store for taxpayers across the US.

Some Major Boosts for Businesses

Changes to Research & Experimentation Investments – This bill postpones the rule that makes businesses spread out the cost of their domestic research and experimentation (R&E) expenses over five years until years beginning after 12/31/2025 (i.e. January 1, 2026 for most calendar year taxpayers). R&E expenses can be immediately be deducted, providing a quicker financial benefit. There is no change for research activities performed outside of the US.

Bonus Depreciation – The legislative measure changes a provision known as bonus depreciation, affording businesses the opportunity to immediately deduct the entire cost of eligible assets placed in service during the period from December 31, 2022, to January 1, 2026. This serves as a robust incentive for businesses to invest in capital assets by frontloading the tax benefits. The 20% bonus depreciation continues to apply for qualified assets placed in service in 2026 and phases out in 2027.

Employee Retention CreditThe upcoming legislation intends to conclude the Employee Retention Credit (ERC) program, disallowing new claims after January 31, 2024. Noteworthy adjustments include dramatic increases in penalty for fraudulent ERC promotions and enhanced provisions aimed at curbing potential fraud within the ERC program. Additionally, the proposed bill extends the time frame during which the Internal Revenue Service (IRS) can assess matters related to the ERC, and it provides an extended opportunity for taxpayers with disallowed ERC claims to seek deductions. These measures collectively signify an effort to streamline and fortify the integrity of the ERC program.

Tax Relief for Qualifying Individuals

Child Tax CreditCurrently set at $2,000 per child, the credit offers a refundable portion (currently up to $1,600 for 2023) based on earned income. The new law proposes statutory increases, with the maximum refundable credit reaching $1,800 for 2023, $1,900 for 2024, and $2,000 for 2025. The overall amount of the credit will be indexed for inflation in 2024 and 2025.

Other Provisions

Disaster ReliefThe bill has provisions for disaster relief, building on previous laws. It forgives penalties for early IRA withdrawals for qualified disaster distributions, allows repayment of withdrawn funds for home purchases, and increases loans from certain plans. Employers in affected areas can claim an employee retention credit, and special rules apply for casualty losses. The relief covers any federally declared disaster from January 1, 2020, to 60 days after the bill becomes law. It also excludes certain wildfire relief payments from income and provides relief for the East Palestine, Ohio train derailment.

What now?

As we move forward to the Senate proceedings, we maintain optimism regarding the positive impact The Act could have in cultivating a more innovative and competitive business landscape in the U.S., ultimately benefiting businesses and the economy. At Lifetime Tax Advisors we see the importance in staying well-informed about possible modifications, offering advice to clients, ensuring compliance with the changing tax environment, and preparing for proposed rule changes.

year-end bookkeeping

At Lifetime Tax Advisors, we strive to maximize saving while reaping the tax benefits applicable to you or your business.

Give us a call today at 972-771-6707.

***Legal Disclaimer***Lifetime Tax Advisors assumes no responsibility for the or liability for any errors or omissions or the results obtained from the use of this information. The information provided is not intended to replace or serve as a substitute for any advisory, tax, or other professional advice, consultation or service. Consult your own professional to see how this information applies to you. All information on this site is provided “as is”, with no guarantee of completeness, accuracy, or timeliness. Any tax advice contained in this communication is not intended to be used as an analysis of tax-related issues nor is it sufficient to avoid tax-related penalties. In no event will Lifetime Tax Advisors be liable to you for any decision made or action taken in reliance on the information on this site.


Latest News

Filing an Extension for Tax Deadlines – Why and How You Do It

Filing an Extension for Tax Deadlines – Why and How You Do It

The major tax deadline we all know and love is April 15. That being said, those who file for an extension have until October 15th to prepare their federal tax return. Why extend the deadline? The most common reason for this is to allow more time to carry out financial tax planning strategies for themselves or their businesses. Read on to learn more about tax deadline extensions.