Kelly Bullis: Possible new tax law coming in 2024

Well, Congress is getting ready to make a mess. There is a push to pass a retroactive law in the next month or so. It would apply to 2023. But wait! Aren’t we already filing 2023 tax returns based upon tax law that was in place at Dec. 31, 2023? How can they change the law after folks are already filing their 2023 tax returns? That is a good question.

It’s not all about putting a burden on the IRS to rewrite their computers in the middle of accepting returns, tax software writers to become maniacs trying to update and rewrite software already in the process of being used to prepare 2023 returns, or taxpayers having to wait before filing their returns, or having to file amended returns.

It is all about scoring political points for upcoming elections.

Proposed changes?

The only business provision for small businesses would be bringing back 100% bonus depreciation expense. Two other provisions are for large businesses, so I won’t waste your time here discussing them.

For individuals, increasing the child credit by $200 for 2023, an additional $100 in 2024 and 2025. Indexing the $2,000-per-child tax credit to inflation.

Increase the $600 threshold for filing 1099-MISC and 1099-NEC to $1,000 for 2024 and beyond.

Finally, end Employee Retention Credit early and impose serious penalties on promoters of fraudulent schemes, also requiring them to disclose a list of all their clients, which would direct the IRS to immediately audit those businesses that used such fraudulent schemers. (FYI, the major fraudulent scheme used is to claim an interruption to supply chain. If you are planning to file a claim based upon that, be VERY careful. Almost a guarantee to get audited by the IRS, even without the law change.)

Even though Congress has issued a draft of this law, and had hopes of passing it in January, the likely earliest possible date to expect this to pass (if at all) would be sometime in March. Current projections have increased to a 50/50 chance of this happening.

Your options? Hold off filing your tax return if you might be affected by any of these proposed retroactive changes to 2023. Or go ahead and file now, but be prepared to file an amended return if this becomes law.

Have you heard? Job 17:12 says, “They change the night into day, saying ‘The light is near’ in the presence of darkness."

Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 775-882-4459. On the web at BullisAndCo.com. Also on Facebook.