How a Delayed Legislation on Capitol Hill May Result in a Tax Season Filled with Stress

The lack of clarity from Congress regarding a $78 billion tax package threatens to complicate the filing season for millions of taxpayers, with small business owners and low-income families with children expected to feel the greatest impact.

The Tax Relief for American Families and Workers Act of 2024 introduces a series of business deductions that could affect approximately 33 million small businesses, alongside an expansion of the child tax credit, claimed annually by nearly 46 million Americans. Most provisions of the bill would retroactively apply to federal returns from 2023, as well as those for 2024 and 2025.

However, with the current filing season well underway, progress on the legislation has stalled. Despite passing the US House with a resounding bipartisan majority of 357-70, the bill has faced delays in the Senate, and its eventual passage remains uncertain.

Senator Ron Wyden (D-Ore.), a prominent advocate for the bill, expressed his commitment to advancing it quickly, stating, “I’m going to work with Leader [Chuck] Schumer and my colleagues on both sides to get this done as soon as possible.” However, progress has been sluggish, with final consideration of the bill likely postponed until late February at the earliest.

While not all households will be affected if they already qualify for the full child tax credit, and many businesses may remain unaffected, a significant portion of taxpayers now find themselves navigating a precarious balance between Congress’ ongoing negotiations, the IRS filing deadline, and the expectation of receiving a timely refund.

Kathryn Keane, an enrolled agent and National Tax Practice Institute fellow, criticized Congress for its delays, emphasizing the undue stress it places on taxpayers. She remarked, “It’s so irresponsible of Congress to [delay voting]. [Changing laws] during the tax season creates a very, very stressful tax season because your filings today may not be accurate tomorrow. Decisions that we made today may not be the best tomorrow because Congress retroactively changed it.”

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