Child Tax Credit - PSA

[Princesca]

Just a friendly reminder that the child tax credit on federal taxes has dropped pretty drastically compared to the past two years. A lot of temporary benefits that were given during 2020 and 2021 have gone away for 2022 filing, so don't bank on your tax return being the same for 2022 as those years.

I just want to spare others the shock I endured this morning.

 

[havaneselover]

People with kids born in 2004 really made out because they got an extra year at the higher rate. I had one in 2003 and one in 2005 so they both lost the big credit at 16 I adjusted my withholdings knowing that my 17-year old would be worth $1,500 less in 2022.

And what is more concerning to me personally but most of you won't care about is the treatment of R&D spending which now has to be amortized. It's insane.

I know most people made out with the 2017 TCJA, but it cost me a ton as a single parent. I'm still bitter.

 

[Princesca]

People with kids born in 2004 really made out because they got an extra year at the higher rate. I had one in 2003 and one in 2005 so they both lost the big credit at 16 I adjusted my withholdings knowing that my 17-year old would be worth $1,500 less in 2022.

And what is more concerning to me personally but most of you won't care about is the treatment of R&D spending which now has to be amortized. It's insane.

I know most people made out with the 2017 TCJA, but it cost me a ton as a single parent. I'm still bitter.

R&D? Like... research and development?

 

[havaneselover]

R&D? Like... research and development?

Yes--for businesses. I work for a software company. We are now the only industrialized country that doesn't let businesses expense R&D in the year in which expenditures occur. I know most people won't care. But it's a terrible policy change.

 

[Princesca]

Yes--for businesses. I work for a software company. We are now the only industrialized country that doesn't let businesses expense R&D in the year in which expenditures occur. I know most people won't care. But it's a terrible policy change.

What is the amortization period? Just out of curiosity.

 

[havaneselover]

What is the amortization period? Just out of curiosity.

5 years for domestic and 15 for international. Have to use the mid-year convention. So in 2022, you can only expense 10% of your domestic R&D expenditures.

Sorry for derailing this.

Thank you OP for the PSA. It is a hard adjustment--especially with inflation.