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Okay, within the last couple of days,
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there were some potential tax updates,
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like a potential new law as it comes to taxes,
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and I want to share some information about that. So right now,
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it is in the preliminary phase. There's some sort of agreement.
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I'm not that political but theres an agreement between the republicans and democrats theyve
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come to some sort of agreement now its gotta go to the house and
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the senate so gotta get the votes so this is not the law as
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of today January 18th but it could be the law very soon and its
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important because theyre gonna make some of it retroactive back into 2023 so
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if youre getting ready to file your 2023 tax returns like so many of
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you are I know its gonna apply to that tax return as well so
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I would hold off on filing and you cant really file for the next
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couple weeks anyways but I would hold off on filing until they finalize this
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so you dont have to redo your taxes and so at the end of
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this the most this is the most important part of all this at least
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the part that Im most excited about. It's the 100% bonus depreciation that they're
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potentially bringing back so bonus depreciation I've talked about in the past that's when
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we can take a write-off or a deduction for equipment or for assets
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that you're buying or for real estate we can take 100% of parts of
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those assets and write it off all in one year 100% of it in
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one year but whats happening to that bonus depreciation is that its tearing down
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but Im gonna talk about that one at the end and give you some
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of the updates on that but Im gonna cover 9 different things just 9
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potential updates and my personal opinion I think these are all gonna pass like
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I think theyve come to an agreement there is some give or take on
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the republican and democrat side I think theyve both given some up of what
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they wanted and well jump into this there is 9 different things so the
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first one is they are expanding the child tax credit so in the beginning
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they wanted to raise the child tax credit this is back to what they
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had in 2020 and 2021 up to a $3,600 per child credit
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which is that is actually money back in your pocket but they have left
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it at $2,000 and that is per kid under 16 and
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then it is $500 when they are older than that but the only thing
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they are changing with the child tax credit is the refundable portion and I
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know it gets a little confusing but it is still maxed at 2000 but
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the refundable portion is going from like 1600 dollars up to 1800 dollars.
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And that is if you don't have taxes to offset you can still get
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up to 1800 dollars of a child tax credit per child instead of the
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old amount which was 1600 so it is honestly not a huge a huge
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thing they are going to they are going to play it off or they
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are going to make it sound like it is a huge deal and they
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are benefiting so many people but it is 200 dollars per kid that is
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the real difference. Ok the second one is they are making adjustments
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to some of the credits and the tax block. Income they are making adjustments
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for inflation and how the earned income tax credit is calculated
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and a lot of you that just kind of happens on your tax return
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it is not something you need to do it is just wherever your income
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falls however many kids you have you get a child tax or an earned
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income credit on top of the child tax credit if your income is low
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enough but nothing you need to plan for in that this one number three
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does apply to business owners and there is some planning that I recommend with
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this so with the this is related to the R&D tax credit
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so if any of you have ever taken the R&D tax credit if you're
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a business owner you should have heard of this or you should look into
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this or get some more information on it. Or we'll help you fill it
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out or we'll help you apply for it and get it on your next
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tax return but the R&D tax credit is where you can I'm
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just gonna give some rough estimates here but it's normally about 10% of whatever
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you're spending on R&D like research and development expenses for your business you
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get about 10% of that back as a credit and thats like money back
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into your pocket but heres the thing the the problem or at least in
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my opinion the problem that theyre fixing they were gonna make this like those
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expenses that you spend on those items the r and d theyre gonna make
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you amortize or write off those expenses over 5 years
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instead of allowing you to deduct those expenses for r and d youre gonna
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have to write them off incrementally like over 5 years so if you spent
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$5,000 on r and d expenses this year you couldnt write off $5,000 you
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couldnt reduce your taxable income by $5,000 this year youre gonna have to do
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it over 5 years but theyre looking to postpone that to
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2026 instead of making it start back in 2023 and again
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if were filing business tax returns for you or if youre filing your business
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tax return that will apply to you if youre taking the R&D tax credit
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ok then number 4 this one is so
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theres theyre changing the limitations on just some business limitations
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when it comes to the business interest determination for partnership
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returns and it might be for S corporation as well but theres a limitation
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on business interest deductions like if you just got a ton of debt if
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youre investing in a like in businesses or youre more of like an asset
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investment company and youre just taking on a lot of debt and you dont
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really have a lot of operations those are the type of businesses that it
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would impact its not going to impact a lot of people but theres just
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some adjustments to those limitations okay number five is the changes to the
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employee retention credit the employee retention tax credit these are the
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ERC credits if you had employees in 2020 and 2021 you
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could be in some instead of having a deadline to file for those credits
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in May of this year 2024 they're moving that deadline up to January
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2024 the IRS my opinion they're just done with these credits there's
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so much fraud theres so many just people doing them wrong and theyre
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trying to train their employees they just got inundated with these theyre just buried
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in these I think they just want to get it over with quicker so
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I think that was they had some influence from the IRS on that.
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But and then related to that this is number 6 on my list that
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Im covering the IRS and this allows the IRS
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to go after companies and people that have been promoting ERC tax
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credits and doing them incorrectly for people.
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So if you are a business owner and maybe even you're not a business
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owner but you may have heard on the on the radio or Facebook ads,
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Instagram ads, there's all sorts of promoters not like typically
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not CPA firms. Or not people that have been in the business of helping
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businesses they just popped up and started to promote these new credits honestly not
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not knowing exactly what they were doing and they filed a ton of these
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credits and the IRS has been finding that a lot of these have been
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fraudulent and this just boosts the penalties that they can be charged for doing
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incorrect ERC tax returns they just brought them up to oh it's
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like $200,000 or 70 up
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to 200000 or 75% of the income they got from helping
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people with these ERC credits so its absolutely insane I think they just wanted
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to stop those false promotions of people trying to like twist business owners
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arms to get those credits but if you've done the credits and if you
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did the credits correctly I wouldn't be worried about them like if you had
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legitimate employees you had legitimate impact to your business you could have claimed the
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ERC credits so you wouldn't have to worry about it but its the companies
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those promoters that theyre gonna go after ok the next one theyre making some
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changes to like a and this is pretty specific like a disaster relief and
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housing initiatives uhm I think its theres several places across
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the country but one of the things one of the areas that came off
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or came up in my research was the ohio train derailment in east palestine
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they were doing some some relief there and thats number seven is
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the u.s. Taiwan tax treaty or another u.s.
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Taiwan tax treaty im not going to go into the details of that its
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not going to apply to a lot of people but then number nine i
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saved the best for last in my opinion. They are potentially increasing
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this bonus depreciation back up to 100% so bonus depreciation
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from 2018 to 2022 we were able to take 100%
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of these assets as a deduction so if you bought a car that was
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more than 6,000 pounds, if you bought furniture for your rental property,
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you remodeled the exterior, did landscaping at an investment property,
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if you bought a tractor or a truck,
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like if you bought assets and equipment, things you were able to write off
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100% of it for the last 5 years but 2023 it was tearing down
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to 80% of that 24% it was going to be 60% 25% it was
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going to be 40% 26% it was going to be 20% so it was
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just tearing down until it disappeared and then we were going to have to
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write off those assets over 5, 7,
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15 years but now they're bringing it back potentially
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I think my opinion is I think they're going to pass it but they're
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bringing it back so we'll be able to write off a hundred percent of
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those assets assets in the year that we buy them and theyre retroactively doing
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this back to 2023 so this is great news for people even if we
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did tax projections with you or if you did tax projections you were using
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probably the 80% rate or a lot of times I'll tell people with rental
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real estate they bought rental real estate I was estimating about 25% of the
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real estate could potentially be subject to bonus depreciation but now
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I'm gonna go back up and estimate about 30% of that could be bonus
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depreciation eligible assets for those real estate deductions but thats thats
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thats the biggest thing that Im excited about is the 100% bonus depreciation just
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keeping it at 100% percent until all the way through 2025 so we got
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23, 24, and 25 at 100 percent instead of tearing down and
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who knows what they are going to do in 2026 k so thats it
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for today you know what you know what never even never told you the
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name of this the name was they always come up with these with these
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catchy names the the name for this for these these proposed changes is the
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tax relief for American families and work workers act of 2024 and
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it's a 78 billion dollar bill so those nine things I listed those are
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the main those are the key parts of this and they're estimating an impact
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of like 78 billion dollars but the tax relief for American Families
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and Workers Act of 2024. I hope you all have a great rest of
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the week and I will talk to you later.
