Is it already time to think about taxes again?
It really is. Time flies, and not just when we are having fun. Today marks the first day that you can file your taxes for 2016, so I think it is a good day to review the changes that listeners can expect this year. Some changes are big. Some will be good news for listeners. And some are not as positive. But all are important, so I want to make people aware of them.
What are the most significant changes that taxpayers can expect this year?
As I mentioned, there are a number of big changes.Two that are likely to impact a significant number of people. First, the Freefile program is now operational. This program, available through the Internal Revenue Service website, is a partnership with commercial tax filing services to provide free filing software for about 100 million taxpayers with incomes of $64,000 or less. Seven in ten of the nation’s taxpayers are eligible for IRS Freefile. and it opened on Friday, January 13. This is a huge positive change for taxpayers this year!
Related to that, starting this year, taxpayers who are preparing their own tax returns using software for the first time may be required to provide their adjusted gross income figure from their prior-year tax returns. This change was made to verify taxpayer identity and prevent identity theft and refund fraud. If you fall into this category – and many might if you decide to use the Freefile program – you can learn more about how to verify your identity and electronically sign tax returns on the IRS website.
What other changes stand out for you?
Many people will be impacted by delayed tax refund related to the earned income tax credit and the additional child tax credit. A new law requires the IRS to hold refunds tied these two credits until February 15. In prior years, refunds could be issued before forms were matched which increased the likelihood of fraud. That is no longer the case, and the hold together with processing times and holidays, means that refunds linked to these tax credits could be delayed until late February, and even into March.
A change that will affect fewer people comes for taxpayers who do not have Social Security numbers, but instead use an individual taxpayer identification number. Under a new law, an individual taxpayer identification number (ITIN) that has not been used on a federal tax return at least once in the last three years will no longer be valid for use on a tax return after Sunday, January 1, 2017, unless renewed by the taxpayer.
Also, any ITIN with middle digits of either 78 or 79 – nnn-78-nnnn or nnn-79-nnnn – will also expire on that date. Any taxpayers filing a tax return this season with an expired ITIN could experience return processing and refund delay as well as denial of some tax benefits until the itin is renewed. That does not apply to most of us, but it is a very important change for those in our communities that do.
Is there any good IRS news on the horizon?
Yes! While some people may have their refunds delayed, the IRS anticipates issuing more than 9 out of 10 taxpayer refunds in less than 21 days. You can use the “Where’s my refund?” tool available on IRS.gov to check the status of a refund.
You can begin checking the status of your refund within 24 hours after the IRS has received your e-filed tax return three or four weeks after mailing your paper return. Additionally, due to the calendar, you will have a couple extra days to file. The due date this year is April 18, 2017, and not April 15, 2017. Not that any of us would wait until the last minute, right?
Any other things we should know this year relating to taxes?
If you have used IRS taxpayer assistance centers for in person assistance with your taxes, it was on a first-come, first-serve basis. That changes this year, and you will need an appointment. To schedule an appointment, taxpayers can call 844.545.5640. You can also use the tac tool to find a location near you. Next week, we will talk about how to protect yourself and avoid scams during tax season. Have a great week!
