Things didn't turn out that way, putting Lena Jones in a bind. The Hunterdon County, New Jersey, mother of two has plenty of reasons to file her taxes quickly.
Jones, 40, works two part-time jobs after being laid off, and her expected tax refund should help meet necessities, as well as the costs of summer camp that have already begun.
“I will stop as long as I feel comfortable,” says Leana Jones, a New Jersey mother.
Courtesy Lena Jones
But she is waiting for her return file. “I'll stop as long as I'm comfortable. I'd rather wait until I hear this, because I don't want to miss the opportunity.”
Jones wants to see what happens with the $78 billion tax deal on the table in the U.S. Senate, which would tweak the child tax credit and could increase her refund this year and in future years. The bill was approved in the House of Representatives by a vote of 357 to 70 last month.
Jones and his fellow parents and businesses are on hold this tax season because of Congress. “Everyone is reporting that things are off to a slow start,” said Tom Osapin, director of tax content and government relations at the National Association of Tax Professionals.
Uncertainty about the child tax credit is one reason for the slowness, he said.
When H&R blocks HRB,
About earnings reported last week, an analyst asked a mass market tax preparer what he was seeing so far this tax season.
“I would say that getting started in the industry is probably a little slower than we thought,” H&R Block CEO Geoff Johns said, according to an AlphaSense transcript. “We have no reason to believe this is anything other than that it is likely related to it [the] Child Tax Credit.”
The first batch of Internal Revenue Service numbers for this year's filing season show the tax collector received 3.6 million fewer returns than in the early stages of last year's filing season, a 19% decrease.
Of course, tax season started later this year than in 2023. Some tax providers say they are not seeing declines in filing volume. Hesitation about the child tax credit accounts for part of the smaller number, Osapin said. Late tax paperwork or revisions to those forms may also be a factor, he added.
IRS Commissioner Danny Werfel said his tax collection agency is prepared to move quickly if the tax deal becomes law, and that taxpayers should not delay their returns. The IRS could begin adjusting returns to reflect changes in the child tax credit and making additional refund checks within six to 12 weeks, Werfel said. He told lawmakers at a congressional hearing on Thursday that he wanted the matter closer to six weeks.
“Taxpayers should not wait for this legislation to file their tax returns. We will take care of any additional refunds for taxpayers who have already filed. They will not need to take additional steps,” he said at a House Ways and Means Committee hearing.
But Jones hasn't changed her plans for now. If more money came to her, she would like to have it all at once.
A tax refund is a big financial event for Americans in any year. This is happening now as delinquency rates on credit card and auto loans return to levels last seen more than a decade ago.
The uncertainty is “just another thing on the very busy schedule of parents wondering how much money they will get for their children this year,” Jones said.
April 15 is still the deadline to pay any taxes due and file a return or get an extension. Some cash-strapped families can only wait so long.
Here are the factors to consider.
Reasons to file your taxes when they are ready
For many people, paying the child tax credit will remain the same with or without the law changing. Researchers point out that the effects of the law are concentrated among low-income families.
No matter what happens with the tax deal, the child tax credit will remain at a maximum of $2,000 per qualifying child this year. The income threshold to start taking advantage of the credit will remain at $2,500.
But under the proposed law, more of the credit would turn into refunds, moving to $1,800 from $1,600 this year. Other changes would count the number of children per family, accelerating the pace of implementation above the earned income starting point.
More than 90% of the tax benefits would end up with households making less than $50,900, according to the Institute on Taxation and Economic Policy.
Roughly 10% of families would be affected by the changes to the child tax credit and the results would be “only modest adjustments to their tax refunds,” Rep. Jason Smith, chairman of the House Ways and Means Committee, said Thursday.
Werfel agreed with Smith. The Missouri Republican drafted the tax bill with Sen. Ron Wyden, an Oregon Democrat who chairs the Senate Finance Committee.
Jones, CEO of H&R Block, told analysts last week and MarketWatch this week that early fluctuations in tax filing numbers will subside. “We have no concerns about the final growth of this season,” he said on Thursday.
Cathy Pickering, chief tax officer at H&R Block, said in a statement that the company recommends people file when they are ready rather than waiting.
She noted that the IRS would be able to make changes if the bill becomes law and filings get one step closer to a potential refund. Pickering added that already filed returns reduce the chances of running into tax season fraud or identity theft.
Some people have a strong justification for moving forward with applications, Osapin 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 forward. There are also political reasons. Some observers say the chances of the bill being passed are increasing in the Senate, with one giving it only a 10% chance of passing.
Reasons for waiting to file a tax return
People who have already filed their tax returns will not need to file an amended return to take advantage of any change in the law, Werfel said Thursday.
However, Osapin said there may be some reasons to wait. He's less confident that the IRS will be able to make changes to already-filed returns itself.
As for avoiding fraud, Osabin said taxpayers concerned about identity theft can ask the IRS for an “Identity Protection PIN” if they really want to protect themselves before filing a return.
Furthermore, he noted, it may take time for online tax preparation companies to update calculations to reflect mid-season law changes.
turbotax intu,
Any changes can be implemented quickly, according to Lisa Greene-Lewis, CPA and tax expert at TurboTax. She recommends submitting the file when it is 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 mother, said it's encouraging to hear that the IRS is ready to act quickly. But the six- to 12-week timeline is too vague for her. “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 correspondents may contact you to learn more.
