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I'm a bit late to this discussion but wanted to add something important that others haven't mentioned. The new bill also increases the refundable portion of the CTC, not just the lookback provision. Starting in 2024 (but NOT retroactive to 2023), the refundable portion will be calculated per child rather than per family. So for 2023 returns, a family with no income still won't benefit from the CTC. But in 2024, a parent could potentially use their 2023 income to qualify if they had income then but not in 2024. And the per-child calculation means families with multiple children will see a bigger benefit. The bill also gradually increases the maximum refundable amount from $1,600 per child to $1,800 in 2025, $1,900 in 2026, and $2,000 by 2027. Just wanted to add this since it affects the long-term planning aspect for families.
Do you know if the age requirements are changing too? Currently it's under 17, but I've heard rumors they might extend it for older dependents like they did during COVID.
The age requirement is staying the same under the current proposal - children must be under 17 at the end of the tax year to qualify for the Child Tax Credit. The temporary expansion during COVID that included 17-year-olds is not part of this new legislation. What's staying consistent is the income phase-out thresholds - $200,000 for single filers and $400,000 for married filing jointly. The credit begins to reduce by $50 for each $1,000 of income above these thresholds.
Has anyone actually read the bill text? I'm looking at it now and it specifically states that the lookback provision (using prior year income) applies "beginning with taxable years beginning after December 31, 2023." That means it starts with 2024 tax year. There's no language in the bill making anything retroactive to 2023. So if you're filing 2023 taxes in the next few months, the old rules still apply - need earned income to get the refundable portion. I think the confusion comes because sometimes we mix up tax years with filing years. The 2023 tax year (which we file in early 2024) is different from the 2024 tax year (which we'll file in early 2025).
Thank you! This is exactly what I was trying to figure out. So my ex who didn't work in 2023 won't be able to claim the CTC for the kids for the 2023 tax year, even with these new changes coming? But potentially for 2024 taxes she could use her 2023 income (if she had any) to qualify?
That's exactly right. For the 2023 tax return that your ex will file in the coming months, she would need earned income in 2023 to benefit from the refundable portion of the CTC. The new changes won't help for this coming tax season. For the 2024 tax year (which will be filed in early 2025), the new rules would take effect. At that point, she could potentially use either her 2023 income OR her 2024 income to qualify for the CTC, whichever is more beneficial. But for the return she's about to file for 2023, the current rules still apply.
Don't forget that for 2025 taxes, bonus depreciation is reduced to 80% (down from 100% in previous years). So if your Apple Watch costs $499 and you use it 50% for business, the depreciable business portion is $249.50, and you can take 80% of that ($199.60) as bonus depreciation in the first year. The remaining $49.90 would be depreciated over 5 years using MACRS. Also, make sure the watch meets the requirements for "listed property" since it's dual-use. You need to keep records of business vs. personal use to substantiate your percentage.
Wait, I thought electronics like phones and computers (and I'm assuming watches?) were 3-year property, not 5-year? Now I'm confused about how I've been depreciating my business tech.
You're right to be confused because the rules aren't always intuitive. Computer equipment (including peripherals like tablets and smartphones) is actually 5-year property under MACRS, not 3-year as many people assume. This includes smartwatches when they're used as computer peripherals. The IRS classifies most technology and office equipment as 5-year property. The 3-year property class is more limited and generally includes things like tractor units and racehorses. It's a common misconception, so don't worry if you've been using the wrong recovery period - you can correct it going forward.
Kinda off-topic but has anyone used TurboTax to handle smartwatch depreciation? I tried last year and got super confused about where to enter the info and whether to use Section 179 or bonus depreciation. End up just entering it as a regular expense and I'm pretty sure that was wrong.
I've done this in TurboTax. You need to go to the Business section, then look for "Business assets, depreciation & section 179." There's a section specifically for entering assets purchased during the year. You'll enter the watch, its cost, business use percentage, and then it will walk you through options for Section 179, bonus depreciation, or regular depreciation. Don't enter it as a simple expense - that's definitely not correct for something that has a useful life of more than one year. The software should help calculate everything correctly once you enter it as a depreciable asset.
Another approach to consider: you might want to pay slightly more than the calculated amount for your estimated taxes. I max out the 24% bracket too, and I always add an extra 5% to my estimated payments as a buffer. This helps in case of any calculation errors and prevents surprises. Also, don't forget that you can adjust your payments throughout the year. If your income situation changes, you can modify your remaining estimated payments accordingly.
That's a good suggestion about adding a buffer. I hadn't considered that. How do you handle the timing of your Roth conversions throughout the year? Do you do them all at once, or spread them out quarterly to match when you're making the estimated payments?
I spread my conversions throughout the year rather than doing them all at once. This gives me more control and helps with cash flow since I'm making estimated tax payments quarterly anyway. I usually do slightly larger conversions in the first half of the year, especially if the market is down. This gives those converted amounts more time to potentially grow tax-free in the Roth. By December, I have a clearer picture of my exact tax situation and can make a final conversion that precisely hits my target bracket maximum.
Has anyone been using tax software to calculate these estimated payments? I tried using last year's TurboTax to estimate my 2025 taxes for Roth conversions, but it keeps giving me errors about tax year mismatches.
Most tax software isn't designed for future year planning like this. I've had good luck with Excel spreadsheets that you can update with the new tax brackets each year. The IRS usually announces inflation adjustments for the upcoming year around October/November.
Don't forget to check if your state has its own free filing portal! Many states now offer their own free filing systems separate from the IRS Free File program. I live in Massachusetts and used their free MassTaxConnect system to file my state return after doing federal through FreeTaxUSA. Saved me the $15 state filing fee. Also, if your income is under $60,000, look into VITA (Volunteer Income Tax Assistance) programs in your area. They'll prepare your taxes completely free with trained volunteers. I used them for years before I started doing my own taxes.
Thank you for this suggestion! I had no idea states might have their own free filing options. I'm in California - does anyone know if they offer something similar?
Yes, California absolutely has a free filing option! It's called CalFile and it's available directly through the California Franchise Tax Board website. It's completely free for eligible California taxpayers and handles most common tax situations. Just go to ftb.ca.gov and search for CalFile. Many other states have similar programs - Illinois has MyTax Illinois, New York has their own free filing options too. It's definitely worth checking your state's tax department website before paying for state filing through a third-party service.
Just wanted to add that if you're switching away from TurboTax, make sure you have copies of your previous years' returns! Some of the free options don't store your old returns for as long, and you might need information from last year's return to file this year's (like your AGI for verification).
Zoe Gonzalez
You should check if you qualify for VITA (Volunteer Income Tax Assistance). They offer free tax prep services if you make under about $60k. They can help with prior year returns too including 2022 W2's. Just google "VITA tax help" plus your city name to find locations. They're legit IRS-certified volunteers.
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Ashley Adams
β’Do these VITA places have actual tax pros or just volunteers? I'm nervous about having someone who doesn't really know what they're doing handle my taxes, even if it's free.
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Zoe Gonzalez
β’They're volunteers but they're all IRS-certified and have to pass tax law training. Many are accounting students, retired tax professionals, or people who work in finance who volunteer their time. Each return also gets quality reviewed by a second volunteer before it's submitted. They're especially good with straightforward tax situations like W2 income. I volunteered with them for two years and the training was really comprehensive. For complex situations involving businesses or complicated investments, you might want a paid professional, but for basic W2 filing, they're absolutely qualified.
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Alexis Robinson
has anyone used turbotax for 2022 W2s? their commercials say "free" but I've heard they charge for everything. any free alternatives that actually stay free?
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Aaron Lee
β’TurboTax is notorious for advertising "free" but then charging for almost everything. I've used FreeTaxUSA for the past 4 years including for a late 2022 W2 filing and it's actually free for federal (like $15 for state). Way more honest than TurboTax.
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Chloe Mitchell
β’TurboTax is the WORST for this! They've been sued multiple times for their deceptive "free" marketing. They have a truly free version that's hard to find on their site, and they'll try to upsell you at every step. For basic W2 filing, use FreeTaxUSA or Cash App Taxes instead - they're actually free unlike TurboTax.
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