Wednesday, December 21, 2016

2017 Income Tax Season: Delayed Refunds, Different Deadline and More

Taxpayers have an extra weekend to buckle down, compile and submit their tax returns in 2017, and new scrutiny of two tax credits means that refunds will be delayed until late February for taxpayers who claim the credits. Those are two big changes the Internal Revenue Service is alerting people to as it gets ready for the nation’s tax season, which will begin Monday, Jan. 23, 2017 .

Because of a holiday in the nation’s capital, the filing deadline to submit 2016 tax returns is Tuesday, April 18, 2017, rather than the traditional April 15 date.

The IRS will begin accepting electronic tax returns Jan. 23, with more than 153 million individual tax returns expected to be filed in 2017. Four out of five tax returns will be prepared electronically using tax return preparation software.

Many software companies and tax professionals will accept tax returns before Jan. 23 and then will submit the returns when IRS systems open. The IRS will begin processing paper tax returns at the same time. There is no advantage to filing tax returns on paper in early January instead of waiting for the agency to begin accepting e-filed returns.

A new law requires the IRS to hold refunds claiming the Earned Income Tax Credit and the Additional Child Tax Credit until Feb. 15 in an effort to detect fraud, and it will take several days for these refunds to be released and processed through banks. Once you add in weekends and the Presidents Day holiday, the IRS says many affected taxpayers may not have access to their refunds until the week of Feb. 27.

“For this tax season, it’s more important than ever for taxpayers to plan ahead,” IRS Commissioner John Koskinen said in a news release. “People should make sure they have their year-end tax statements in hand, and we encourage people to file as they normally would, including those claiming the credits affected by the refund delay. Even with these significant changes, IRS employees and the entire tax community will be working hard to make this a smooth filing season for taxpayers.”


April 18 Filing Deadline

Because of a holiday in the nation’s capital, the filing deadline to submit 2016 tax returns is Tuesday, April 18, 2017, rather than the traditional April 15 date, which falls on a Saturday. The Internal Revenue Service says that normally would push the filing deadline to the following Monday, April 17, but Washington, D.C., will celebrate the legal holiday of Emancipation Day on Monday, April 17.

That, in turn, pushes the federal tax deadline to Tuesday, April 18, for the nation.


Warnings on Phishing Scams
IRS officials warn taxpayers to be alert to phone and email phishing scams that try to trick victims into divulging their personal information.

The IRS says it has been working with the tax industry and state revenue departments to continue strengthening processing systems to protect taxpayers from identity theft and refund fraud.

Scammers will call or email taxpayers to verify the last four digits of their Social Security number by clicking on a link provided in an email, which claims that recent data breaches across the nation may be involved.

Government offices do not send emails like this, authorities said.

Taxpayers should not reply to emails requesting confidential information, especially your Social Security number, birth date, salary information or home address. If you receive an email asking for a copy of your W-2 form, you should immediately contact your employer. You also may call 1-800-MD-TAXES or email mdcomptroller@comp.state.md.us.



Refunds in 2017

Choosing e-file and direct deposit for refunds remains the fastest and safest way to file an accurate income tax return and receive a refund. The IRS anticipates issuing more than nine out of 10 refunds in less than 21 days, but there are some important factors to keep in mind.

As in past years, the IRS will begin accepting and processing tax returns once the filing season begins. All taxpayers should file as usual, and tax return preparers should also submit returns as they normally do – including returns claiming the Earned Income Tax Credit and the Additional Child Tax Credit.

Where's My Refund? ‎on IRS.gov and the IRS2Go phone app will be updated with projected deposit dates for early Earned Income Tax Credit and the Additional Child Tax Credit refund filers a few days after Feb. 15. Taxpayers will not see a refund date on Where's My Refund? ‎or through their software packages until then.

Before you file, the IRS has these tips to help you.

Gather your records. Make sure you have all your tax records. This includes receipts, canceled checks and other records that support income, deductions or tax credits that you claim. If you purchased health insurance through the Marketplace, you will need the information in Form 1095-A to file.
Report all your income. You will need to report your income from all of your Forms W-2, Wage and Tax Statements, Forms 1099 and any other income – even if you don’t receive a statement – when you file your tax return.
Try IRS Free File. Free File is available only on IRS.gov. If you made $62,000 or less, you can use free tax software to file your federal return. If you earned more, you can use Free File Fillable Forms, an electronic version of IRS paper forms.
Try IRS e-file. Electronic filing is the best way to file a tax return. It’s accurate, safe and easy. If you owe taxes, you have the option to e-file early and pay by April 18 to avoid penalties and interest.
Use Direct Deposit. The fastest and safest way to get your refund is to combine e-file with direct deposit. The IRS issues more than nine out of 10 refunds in less than 21 days.
Review your return. Mistakes slow down your tax refund. If you file a paper return, be sure to check all Social Security numbers. That’s one of the most common errors.
Visit IRS.gov. The website has forms and other info you need to file your tax return. Click on the "Filing" icon for links to filing tips, answers to frequently asked questions and IRS forms and publications. The IRS has many online tools on IRS.gov to help you file and answer your tax questions. The tool gives the same answers that an IRS representative would give over the phone.


Help for Taxpayers

Volunteer Income Tax Assistance and Tax Counseling for the Elderly offer free tax help to people who qualify. Go to irs.gov and enter “free tax prep” in the search box to learn more and find a nearby VITA or TCE site, or download the IRS2Go smartphone app to find a free tax prep provider.

The IRS also reminds taxpayers that a trusted tax professional can provide helpful information and advice about the ever-changing tax code. Tips for choosing a return preparer and details about national tax professional groups are available on IRS.gov.

The IRS also reminds taxpayers that they should keep copies of their prior-year tax returns for at least three years. Taxpayers who are changing tax software products this filing season will need their adjusted gross income from their 2015 tax return in order to file electronically. The Electronic Filing Pin is no longer an option. Taxpayers can visit IRS.Gov/GetReady for more tips on preparing to file their 2016 tax return.


Renewal Reminder for Individual Taxpayer Identification Numbers (ITINS)

ITINs are used by people who have tax-filing or payment obligations under U.S. law but are not eligible for a Social Security number. Under a recent change in law, any ITIN not used on a tax return at least once in the past three years will expire on Jan. 1, 2017. In addition, any ITIN with middle digits of either 78 or 79 (9NN-78-NNNN or 9NN-79-NNNN) will also expire next month.

This means that anyone with an expiring ITIN and a need to file a tax return in the upcoming filing season should file a renewal application in the next few weeks to avoid lengthy refund and processing delays. Failure to renew early could result in refund delays and denial of some tax benefits until the ITIN is renewed.

An ITIN renewal application filed now will be processed before one submitted at the height of tax season from mid-January to February. Currently, a complete and accurate renewal application can be processed in as little as seven weeks. But this timeframe is expected to expand to 11 weeks during tax season.

Several common errors are currently slowing down or holding up ITIN renewal applications. The mistakes generally center on missing information, and/or insufficient supporting documentation. ITIN renewal applicants should be sure to use the latest version of Form W-7, revised September 2016. The most current version of the form, along with its instructions, are posted on IRS.gov.