Tax Season Coming with Changes, How the Child Credit and Earned Income Credit Could Affect Returns

As the proposed Tax Relief for American Families and Workers Act of 2024 sits in the Senate awaiting passage, some taxpayers are holding off on filing their 2023 tax returns in hopes of an expanded child tax credit. The child tax credit was expanded in 2021 and could see a revival in the new bipartisan package. There has been optimism around approval, but nothing has been finalized.

Partner Mark Welsh shares that an expansion would provide some families a better refund. “A married couple who qualify as they make under $400,000. They have three children. If this passes, they’re going to get potentially 200 extra dollars per child, as far as a refund. so that would be 600 extra dollars as part of a refund for that family,” said Welsh.

A statistic from the IRS states one-fifth of Americans who qualify for the Earned Income Tax Credit don’t apply and leave up to $7,000 on the table. Welsh believes that applying for the credit is quite complicated. “You’re asking them to jump through some hoops as they relate to qualifying child guidelines, relationship test age, test residency, residency test, some of them, they just scared off, and they don’t want to do it,” Welsh said.

Some accounting firms are holding off on filing returns until they see if the child credit moves forward. Welsh says that delay could lead to a crunch of filing once that bill’s future is solidified.

Read the full article published by WMDT.