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I attended a tax update webinar last week where they specifically addressed section 174. The speaker (from one of the Big 4 firms) said there's bipartisan support for changing the R&E capitalization rules, but legislative action is still uncertain. Their recommendation was to continue compliance with current capitalization requirements while monitoring for updates. They specifically mentioned that the definition of "research and experimental expenditures" hasn't changed - only the tax treatment. So activities qualifying as R&E before TCJA still qualify now, but instead of immediate expensing, they require capitalization and amortization.
Did they give any timeline for potential changes? I'm wondering if I should delay some research initiatives to 2025 if there's a chance the rules might revert back to allowing immediate expensing.
They were very careful not to predict any specific timeline for legislative changes, noting that previous attempts to modify section 174 had stalled despite apparent bipartisan support. Their advice was to make business decisions based on current law rather than speculation about future changes. The speaker specifically cautioned against delaying legitimate business activities solely for tax purposes, pointing out that even if the law changes, there's no guarantee it would be retroactive or when exactly it would take effect. They emphasized that the business needs should drive research timing, with tax considerations being secondary.
Does anyone know how IRS is handling enforcement of section 174 capitalization? Are they actively auditing this area? My firm has always expensed R&D and im worried we might be targeted if we mess up the new capitalization requirements.
The IRS has been gradually increasing enforcement in this area as the rules have been in effect for a few tax cycles now. Initially there was some leniency due to the significant change, but they're becoming more attentive to proper section 174 compliance.
For a one cent discrepancy, I'd honestly just pay it through the IRS Direct Pay website and be done with it. Takes 5 minutes, no fee for using a bank account, and you'll get confirmation that your account is settled. I had something similar happen (mine was $0.37) and just paid it online. Haven't heard anything since, so I assume it's all good!
Does the IRS payment system even accept payments as low as one cent? I'm wondering if there's a minimum amount you can pay through their online system.
Yes, the IRS Direct Pay system will accept payments of any amount, even just one cent. There's no minimum payment requirement. When you enter the payment amount, you can put in $0.01 and it will process it normally. The system might seem like it would have a minimum, but it's designed to handle any tax liability amount, no matter how small. Just make sure you select the correct tax year and form when making the payment so it gets applied correctly to your account.
Whatever you do, don't ignore it! Even though it's just a penny, it's still technically a tax debt that will stay in their system. I ignored a small adjustment once (it was around $3) thinking it was too small to matter, and a year later received a notice with interest and a $25 failure-to-pay penalty added. That $3 turned into almost $30! The IRS computers don't care about the amount - once you're flagged for owing money, the automated processes just keep running.
Just a heads up for anyone filing - if your income is over certain thresholds, the Child Tax Credit starts to phase out. For single filers, it starts reducing when your modified adjusted gross income exceeds $200,000. Could that possibly be affecting your amount? The credit reduces by $50 for each $1,000 above the threshold. Might be worth checking if your income jumped more than you realized.
Thanks for mentioning this! I double checked and my income is definitely well below that threshold (I wish I made that much lol). I'm making about $52,000 a year, so phaseout isn't the issue. Sounds like it's just the expiration of that temporary increase like others mentioned. Really hoping they bring back the higher amount!
Has anyone tried using different tax software to see if you get different results? Last year I switched from TurboTax to H&R Block online and somehow got an extra $420 back. Might be worth trying a different service to see if they calculate things differently or find additional credits.
That's not how taxes work. If you got different results, one of them calculated something wrong. The tax laws are the same regardless of which software you use. You might have entered something differently between the two programs. Different software doesn't give you access to different credits - you either qualify or you don't.
Just to add a different perspective - I work as a volunteer tax preparer, and filing status questions are some of the most common issues we see. For Surviving Spouse status (sometimes called Qualifying Widow/er), the rules are very specific: 1. Your spouse must have died in one of the two prior tax years 2. You must have a child, stepchild, or adopted child who qualifies as your dependent 3. This child must live in your home 4. You must pay more than half the cost of keeping up the home The dependent requirements are key. A qualifying dependent child generally needs to be under 19, or under 24 if they're a full-time student, AND they can't provide more than half of their own support. I recommend using the Interactive Tax Assistant on the IRS website. It walks you through all the requirements step by step.
Quick question - my granddaughter lives with me after my daughter died last year. Would that qualify me for this surviving spouse status too or is it only for spouses?
This status is specifically for those who were married and lost their spouse - it's not for other family relationships like grandparents who are raising grandchildren. The "Surviving Spouse" status is designed to give a recently widowed taxpayer the benefits of joint filing rates for the two years following their spouse's death. In your situation with your granddaughter, you should look into filing as Head of Household instead, which could give you better tax rates than filing as Single. If you provide more than half her support and she lives with you, you may qualify for this beneficial status.
Don't forget that if your dad doesn't qualify for Surviving Spouse status, Head of Household might still be better than Single! Even if you don't qualify as his dependent, does he support anyone else who might qualify? The tax rate differences between Single and Head of Household can be significant. Also check whether he qualifies for the Credit for Other Dependents ($500) for supporting you, even if you don't meet all the tests to be a qualifying child or qualifying relative. The income limits for this are different from the dependency requirements!
No, it's just me and him in the house. I didn't realize there might be a partial credit even if I'm not a full dependent. Do you know what the income threshold is for that $500 credit? I made about $24,000 last year if that helps.
This is a good point - my sister didn't qualify as a dependent because of her income, but I still got a partial credit for supporting her. The tax preparer explained that the rules for the Credit for Other Dependents were different than full dependency claims.
Sofia Morales
Have u tried contacting Costco about it? Their customer service is usually pretty good and they might let u return it even if it's been opened. I bought the wrong version last year and they exchanged it no questions asked even tho I had installed it already.
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Jamal Wilson
ā¢That's actually a really good idea. I didn't consider Costco might take it back since I installed it. I'll give them a call tomorrow and see what they say. Did you return yours to the store or did you have to call their customer service line first?
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Sofia Morales
ā¢I just took it back to the store with my receipt. The person at the return counter didn't even ask any questions, just processed the return right away. Costco's return policy is pretty great for most things. Just make sure you bring the original packaging with everything that came in the box, even if it's been opened.
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Dmitry Popov
Pro tip: next time skip buying ANY version and use freetaxusa.com instead. I switched from Turbotax 3 years ago and never looked back. It's free for federal filing (only $15 for state) and does everything Turbotax does without the crazy price tag. They handle investments, rental properties, self-employment, literally everything.
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Ava Garcia
ā¢Does FreeTaxUSA handle K-1 forms and rental properties well? I've been using TurboTax Home & Business for years but the price keeps going up every year. Worried about switching and missing deductions though.
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