It hasn’t worked out that way, putting Leanna Jones in a bind. The Hunterdon County, N.J., mother of two has lots of reasons to file her taxes quickly.
Jones, 40, is working two part-time jobs after a layoff, and her anticipated tax refund would help with necessities, as well as summer-camp costs that are already coming.
But she’s waiting to file her return. “I will hold off as long as I’m comfortable. I would rather wait until after I hear this, because I don’t want to miss out,” Jones told MarketWatch.
Jones wants to see what happens with the $78 billion tax deal sitting in the U.S. Senate, which would tweak the child tax credit and might increase her refund this year and in the coming years. The bill passed the House of Representatives by a 357-70 vote last month.
Jones and fellow parents as well as businesses are caught in a holding pattern this tax season because of Congress. “Everybody is mentioning things are off to a slow start,” said Tom O’Saben, director of tax content and government relations with the National Association of Tax Professionals.
Uncertainty over the child tax credit is one cause of that slowness, he said.
When H&R Block
HRB,
reported earnings last week, an analyst asked the mass-market tax preparer what it was seeing so far this tax season.
“I would say that, in the industry, it is getting started maybe a little slower than we thought,” Jeff Jones, H&R Block’s CEO, said, according to an AlphaSense transcript. “We have no reason to believe that that’s anything other than probably related to [the] child tax credit.”
The first batch of Internal Revenue Service numbers for this year’s filing season show the tax collector has received 3.6 million fewer returns compared with the early stages of last year’s filing season, a 19% drop.
Of course, tax season began later this year than in 2023. Some tax-service providers say they aren’t seeing dips in filing volume. But hesitancy about the child tax credit accounts for part of the lower number, O’Saben said. Tardy tax paperwork or revisions on those forms may also be a factor, he added.
IRS Commissioner Danny Werfel said that his tax-collecting agency is ready to move quickly if the tax deal becomes law, and that taxpayers shouldn’t delay their returns. The IRS could start adjusting returns to reflect the changes to the child tax credit and churning out extra refund checks within six to 12 weeks, Werfel said. He wants it closer to six weeks, he told lawmakers at a congressional hearing on Thursday.
“Taxpayers should not wait for this legislation to file their returns. We will take care of getting any additional refunds to taxpayers who have already filed. They won’t need to take additional steps,” he said at a House Ways and Means Committee hearing.
But Jones isn’t changing her plans — for now. If more money is coming to her, she’d like to get it all at once.
A tax refund is a major financial event for Americans in any year. Now it’s happening while credit-card and car-loan delinquency rates return to levels last seen more than a decade ago.
The uncertainty is “just one more thing that’s on the very busy schedule of parents who are wondering how much money they are going to have for their kids this year,” Jones said.
April 15 is still the deadline to pay any taxes owed and file a return or get an extension. Some cash-strapped families can only wait it out for so long.
Following are factors to consider.
Reasons to file your taxes when they’re ready
For many people, the child tax credit’s payout will stay the same with or without a law change. The law’s effects are concentrated among lower-income households, researchers note.
Regardless of what happens with the tax deal, the child tax credit would stay at a $2,000 maximum for each eligible child this year. The income threshold to start tapping the credit would remain at $2,500.
But under the proposed law, more of the credit would turn into refund money, moving to $1,800 from $1,600 this year. Other changes would count children per household, speeding the phase-in above the earned-income starting point.
Over 90% of the tax benefits would wind up with households making less than $50,900, according to the Institute on Taxation and Economic Policy.
Roughly 10% of households would be affected by the child-tax-credit changes and the results would be “just modest adjustments to their tax refunds,” Rep. Jason Smith, the House Ways and Means Committee chairman, said Thursday.
Werfel agreed with Smith. The Missouri Republican crafted the tax bill with Sen. Ron Wyden, a Democrat from Oregon chairing the Senate Finance Committee.
Jones, the H&R Block CEO, told analysts last week and MarketWatch this week that the early blips in tax-filing numbers would recede. “We have no concern about the ultimate growth for the season,” he said Thursday.
Kathy Pickering, H&R Block’s chief tax officer, said in a statement that the company is recommending people file when ready instead of waiting.
The IRS will be able to make changes if the bill becomes law and a filed return is one step closer to a potential refund, she noted. An already-filed return lowers the chances of getting snagged in tax-season scams or identity theft, Pickering added.
Some people have a powerful justification to go ahead with filing, O’Saben said. “If it’s an economic decision, don’t wait. Especially if it’s the difference between paying your bills and feeding your family [and not being able to do so].”
There are practical reasons to move ahead. There are also political reasons. Some observers say the bill’s odd are growing longer in the Senate, with one giving passage just a 10% chance.
Reasons to wait to file your tax return
On Thursday, Werfel said people who already have filed their tax returns would not need to file an amended return to take advantage of any law change.
Still, O’Saben said there could be some reasons to wait. He’s less confident the IRS will be able to make the changes on already-filed returns by itself.
As for avoiding fraud, O’Saben said taxpayers who are worried about identity theft can ask the IRS for an “Identity Protection PIN” if they really want to protect themselves before filing a return.
Furthermore, it might take online tax-prep companies a little time to update calculations reflecting midseason law changes, he noted.
TurboTax
INTU,
can quickly apply any changes, according to Lisa Greene-Lewis, CPA and tax expert at TurboTax. She recommends filing when ready rather than waiting. The IRS Direct File platform can incorporate tax-law changes in less than a day, Werfel said.
Jones, the New Jersey mom, said it’s encouraging to hear the IRS is ready to move quickly. But the six- to 12-week timeline is too hazy for her liking. “I’m still skeptical,” she told MarketWatch.
What are your questions and concerns about taxes? Let us know at readerstories@marketwatch.com. One of our reporters might reach out to you to learn more.
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