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Tag Archive | "Protecting Americans from Tax Hikes"

Four tax changes that could impact your 2016 return


TAX-Four-tax-changes

(BPT) – With tax filing season upon us, it’s a good idea to educate yourself on what’s changed since last year. While it’s been a relatively quiet year in terms of new tax laws, there are a handful of items for which you’ll want to prepare.

1. The Tax Deadline is April 18.

This year, the deadline to file returns is Tuesday, April 18, 2017, rather than the traditional April 15 date. That’s because the April 15 falls on a Saturday and Emancipation Day, the anniversary of the abolition of slavery, is recognized on Monday, April 17, 2017 and is a holiday in the District of Columbia. For tax-filing purposes, the IRS treats this day as a federal holiday.

2. Delayed refunds for some early filers.

If you claim the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) this year, you’ll have to wait until after mid-February to get your refund. The Protecting Americans from Tax Hikes (PATH) Act, passed in late 2015, says the IRS cannot issue credits or refunds for an overpayment before Feb. 15, 2017 to any filer who claims the EITC or ACTC.

The delay gives the IRS more time to review income tax returns – and prevent the agency from inadvertently processing fraudulent returns. Fraudsters file bogus returns before the actual filer can complete their taxes and often claim credits like the EITC and ACTC.

Both the EITC and ACTC are refundable tax credits. That means they are beneficial even after reducing your tax liability to zero. If the amount of these credits is more than the amount of taxes due, you’ll get the difference back as a refund. Savvy criminals know this – and input numbers to make it look like they should get more money back.

If you don’t file either of these credits, the IRS says your refund will likely get processed in the typical time frame of 21 days.

3. Don’t be surprised if your state asks for your driver’s license number or state ID.

Depending on the state in which you live, you may be asked to provide your driver’s license number (DLN) or state ID number when you file your 2016 state return. This is part of a broad effort by the IRS, states and the entire tax industry to lessen the risk of tax-related identity theft. Identity thieves may have personal information such as your name and Social Security number, but not your DLN. The additional information helps states verify you are who you say you are.

“Some states, such as Alabama, will ask taxpayers who e-file to provide both the DLN as well as date of issue, expiration number and issuing state,” says Mark Jaeger, director of Tax Development for TaxAct. “If you use a DIY tax solution like TaxAct, you’ll be prompted to enter the information required by your state as you prepare your return.”

Implementing additional identity verification measures, such as requesting a filer’s DLN and related information, can help curtail the number of fraudulent returns states process this year. The IRS now requests this information, but it is not required to electronically file a federal return.

4. Affordable Care Act (ACA) forms may be late this year, but don’t wait to file your return.

By now, you’re probably accustomed to receiving ACA-related forms reporting whether you and members of your household met health insurance coverage requirements established by the ACA for the prior year. What’s new this year is when you’ll receive some of those forms.

The deadline for companies and insurers to issue Forms 1095-B and 1095-C to individuals has been delayed this year. Employers and insurance providers must mail your forms by March 2, 2017, considerably later than the original Jan. 31 deadline.

“Remember, you don’t need to file these forms with your return,” Jaeger says. “However, the forms can be helpful in identifying coverage months if the entire tax household did not have full-year health insurance coverage. Once you receive the applicable form, keep it with your other tax documents. The IRS gets their own copy so you don’t need to attach it to your return.”

Keep up to date with a little help from your friends.

Staying abreast of tax changes before you file your return can be tough. Fortunately, taxpayers can turn to a number of resources, including TaxAct, for help.

Posted in Featured, Tax TimeComments Off on Four tax changes that could impact your 2016 return

Three ways to plan ahead for the 2017 tax season


_BUS-Plan-ahead-for-2017-tax-season

(BPT) – With the tax season approaching, now is the time to start thinking about creating a strategy to help maximize tax refunds in the year ahead. From the passage of the Protecting Americans from Tax Hikes (PATH) Act to the increase in health insurance penalties, here are a few items to keep in mind before the IRS begins accepting tax returns.

1. Donating to charity, making an extra student loan payment or contributing to an IRA can lower your adjusted gross and taxable income.

If you are a taxpayer that itemizes your deductions, donating to a qualified charity by Dec. 31 and saving the necessary documentation can lower your taxable income. Taxpayers can also deduct up to $2,500 of interest paid on their student loans each year, even if the payment is voluntary. For those contributing to their IRA, taxpayers can deduct up to $5,000, and have until April 16, 2016 to make contributions.

2. Your health insurance penalty will increase if you are uninsured and do not sign up by Jan. 31.

The per-person flat fee penalty for not having health insurance has increased more than 630 percent since it was first implemented in 2014.

Taxpayers will now have to pay a penalty of $695 per uncovered adult, plus $347.50 per uncovered child up to a maximum of $2,085 or 2.5 percent of their household income over the filing threshold, whichever is greater. That means a family of four earning $60,000 would pay a penalty of more than $2,000.

According to H&R Block’s estimates, taxpayers without insurance in 2015 paid an average penalty of $401. This was a 125 percent increase from 2014, when the average penalty was $178.

There are some cases where an uninsured taxpayer may qualify for an exemption from the penalty, but the only way to completely avoid it in 2017 is to enroll and stay covered under a qualified insurance plan.

3. If you claim the earned income tax credit (EITC) or additional child tax credit (ACTC), your refund will be delayed until at least Feb. 15.

The passage of the PATH Act now requires the Internal Revenue Service (IRS) to hold the entire refund for returns claiming the EITC and ACTC until at least Feb. 15, depending on when the return is filed.

The IRS estimates approximately one in five EITC payments are made through fraudulent filings or confusion due to the complexity in claiming the benefit. Employers are now required to send employee W-2s to the IRS by Jan. 31 to allow the IRS additional time to help prevent identity theft and fraud.

The IRS will begin releasing funds on Feb. 15, but taxpayers may not see the funds deposited into their banking accounts immediately. This law could affect approximately up to 30 million taxpayers who claim these tax credits.

If you are one of the 30 million taxpayers who claim these credits and are worried about a delayed refund, visit a local H&R Block professional to see how they might be able to help. For more information, visit hrblock.com/PATH.

Posted in Business, Featured, Tax TimeComments Off on Three ways to plan ahead for the 2017 tax season


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