IRS Sees Millions of Tax Returns Last Days of Tax Filing Season

WASHINGTON — The Internal Revenue Service today announced that the agency has received 135.6 million returns this year following a late surge of filings last week.

During the week ending April 21, the IRS received more than 17 million tax returns. The vast majority, 13.6 million returns, were filed through IRS e-file.

Looking at the entire tax filing season, the IRS has received 135.6 million tax returns through April 21. With the influx of returns last week, the number of filings is now close to the number of returns from last year’s filing season.

With the mid-April filings, the number of refunds issued this year swelled to 97 million worth $268.3 billion. The average refund was $2,763, up slightly from last year’s average of $2,711.

Taxpayers have filed 11.6 million extension forms this filing season, up 0.9 percent compared to the same time last year. The vast majority of extensions were e-filed, 9.7 million, an increase of

11 percent from the same time last year.

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                   2017 FILING SEASON STATISTICS

Cumulative statistics comparing 04/22/2016 and 04/21/2017
Individual Income Tax Returns: 2016 2017 % Change
Total Returns Received 136,528,000 135,638,000 -0.7
Total Returns Processed 129,456,000 128,789,000 -0.5
E-filing Receipts:
TOTAL 122,546,000 122,164,000 -0.3
Tax Professionals 70,864,000 70,401,000 -0.7
Self-prepared 51,682,000 51,763,000 0.2
Web Usage:
Visits to IRS.gov 325,525,568 312,255,666 -4.1
Total Refunds:
Number 97,079,000 97,104,000 0.0
Amount $263.197 Billion $268.296 Billion 1.9
Average refund $2,711 $2,763 1.9
Direct Deposit Refunds:
Number 81,221,000 81,646,000 0.5
Amount $234.269 Billion $239.410 Billion 2.2
Average refund $2,884 $2,932 1.7

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15 Expenses Many Taxpayers Think They Can – But Actually Can’t – Claim As Tax Deductions

  1. Can I deduct the cost of styling photos for my Instagram account?
  2. Can I deduct moving expenses for my dog?
  3. Can I deduct the cost of covering up a tattoo to keep my job?

I get lots of questions like the ones above from taxpayers throughout the year. My answer is usually, “It depends.” That’s because facts and circumstances matter: tax deductibility may hinge on such specifics as what you do for a living, where you live, and whether you have a diagnosed medical condition.

For the record, my answers to these specific questions:

  1. I don’t know, are you Beyoncé?
  2. Your dog is considered property so you can deduct those costs so long as you otherwise meet the criteria for moving expenses.
  3. No, it’s considered a personal expense, but do it anyway if you need to keep your job. Or switch jobs.

Most of the time, the rules are straightforward. Occasionally, you’ll hear about a tax deduction that some other person could wrangle, but that’s typically because of very specific facts and circumstances. Follows is a list 15 expenses that many taxpayers think they can – but can’t – claim as tax deductions on an individual federal income tax return (but a few still can):

  1. Pets.No matter how much your four-legged, scaly or feathered friend feels like a member of your family, the cost of caring for your pet – from food to vet visits – is generally not deductible. The Internal Revenue Service (IRS) considers pet-related expenses routinely personal. A few exceptions apply, including the care of service animals and guard dogsand potentially, charitable expenses for animal rescues.
  2. Alarm systems.There is no tax deduction for the installation and maintenance of an alarm system at your hometo protect your personal belongings even if you have really, really nice stuff. There’s an exception, however, if you’re protecting your business property: the installation and the monthly fees at your place of business are deductible. If your place of business happens to be your home, you can deduct a portion of the alarm system if you claim the home office deduction.
  3. Gym memberships and weight loss programs.Gym memberships and weight loss programs are only deductible as a treatment for a diagnosed disease or condition. The program must be specifically ordered by your doctor: if your doctor merely advises you to lose some weight or up your activity level to protect your health, that’s not sufficient. Remember that you still have to meet the applicable thresholds to claim the deduction which means that you must itemize on a Schedule A and your deductible medical expenses are only those that exceed 10% of your adjusted gross income (AGI).
  4. Plastic surgery.You cannot deduct the cost of plastic surgery to simply look or feel better; as with gym memberships and weight loss, to be deductible, the procedure must be a treatment for a specific disease or condition diagnosed by your doctor. Plastic surgery for a non-medical purpose is never a tax-deductible expense.
  5. Vitamins and health shakes.Assuming that you itemize, you can deduct qualifying medical expenses. That includes prescription drugs but over the counter meds – even if you need them – don’t count unless prescribed by a doctor (a mention or suggestion isn’t sufficient). Even when prescribed by a doctor, certain foods, and food supplements – like health shakes – may still be non-deductible if they are merely taking the place of other foods. However, there are some exceptions, like those for food allergies or celiac disease.
  6. Maternity clothes.Clothing for work is only deductible if the sole purpose is clearly for business purposes (think branded uniforms). It’s not deductible if you could wear the clothes outside of your workplace even if you don’t. That goes for maternity clothes, too. If you have to stock up on maternity clothes – including suits for court or coats for outdoor use – to get you through your pregnancy, that cost is not deductible even if you don’t plan to wear them again. Ever.
  7. Driver’s license fees.While state and local taxes are deductible for taxpayers who itemize, associated costs and fees may not be. That includes your driver’s license and car inspection fees. Similarly, you can’t deduct the cost of licensing dogs, cats or other animals – even if they’re considered property in the state where you live.
  8. Political contributions.You cannot deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. Likewise, you can’t deduct lobbying expenses, including amounts paid for research, preparation, planning, or coordination of those expenses. You can’t get around the rules by claiming the expenses are for business purposes: they’re still not tax deductible.
  9. Commuting expenses.You cannot deduct the costs of getting to and from work, no matter if you take a bus, trolley, subway, taxi, or drive your own car. Commuting expensesto and from your regular place of work are never deductible; however, the cost of other business or job-related travel may be.
  10. Private school.Private school expenses (including tuition) are not deductible. However, expenses for a child in nursery school, preschool, or similar programs for children below the level of kindergarten may be deductibleif they otherwise qualify as child care.
  11. Homeschooling expenses.Teachers may deduct up to $250 for books, supplies, computer equipment, and supplementary materials used in the classroom and paid for out of pocket. This rule doesn’t apply to those who homeschool: in Pub 17, the IRS specifically excludes expenses for home schooling for purposes of the deduction. No other federal tax deductions apply: however, a handful of states, including Louisiana, allow state tax breaks to cover the cost of homeschooling expenses.
  12. Babysitting.Occasional babysitting so that you can catch a movie that isn’t animated (!) or enjoy a nice meal may be desperately needed, but is still considered personal in nature and not tax deductible. However, if you pay for child care so that you can work or look for work, those expenses may count towards the child and dependent care credit.
  13. Expenses paid by someone else.In most cases, the IRS only allows deductions for amounts that you pay out of pocket for your own expenses (or those belonging to your spouse and your dependent). If someone else makes your home mortgage payment or pays off your medical bills, typically neither of you can claim a deduction. However, for purposes of the student loan interest deduction, if another person makes a student loan payment on your behalf, it’s as though you made the payment. Some limitations apply.
  1. Clown noses and sparkly leotards.Typically, you can’t claim a tax deduction for expenses for clothing, make-up, or hair care expenses for your job if you could wear them outside of work – even if you wouldn’t (see #6). However, professional artists and performers may be able to deduct certain expenses – like the costs of clown noses and sparkly leotards – as an above-the-line deduction if those items are used exclusively for performances. (If you want to wear your clown nose and/or sparkly leotard outside of your performances, I won’t judge you, but you’ll lose your opportunity for a tax deduction.)
  2. Child support.Okay, this one is a little bit of a cheat. While most of the deductions on the list could, under some circumstances, be shoe-horned into a deductible position, child support is never deductible: it is tax neutral. It is not tax deductible to the payor nor taxable to the recipient. However, spousal support is both tax deductible to the payor and taxable to the recipient. For more on both, check out this prior article.

Some taxpayers can claim certain of these deductions under specific circumstances (home offices, diagnosed medical conditions, special occupations) but these deductions are off-limits for most taxpayers. If you think they might apply to you – or if you’re not sure – it’s always best to consult with your tax professional.

 

IRS Addresses Top Tax Refund Myths As Tax Season Rolls On

 

Posted: 01 Feb 2017 11:27 AM PST

It’s tax season! Tax season opened on January 23, 2017, and according to the Internal Revenue Service (IRS), so far, so good.

Unfortunately, some taxpayers were caught off guard by a new rule that requires the IRS to hold tax refunds for taxpayers who claim the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit. You can find out more about those credits and the delay here.

As taxpayers eagerly await their tax refunds, the IRS has acknowledged that there are a number of “misunderstandings and speculation about refunds.” To help sort out the truth from the confusion, the IRS has issued a list of refund-related myths:

Myth 1: All Refunds Are Delayed

Taxpayers who are affected by the new law those claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC). Those taxpayers should expect the IRS to hold their entire refund check since the IRS isn’t allowed to release the part of the refund that is not associated with the EITC and ACTC. Taxpayers who do not claim the EITC or the ACTC are not affected by the new law. However, while more than 90% of federal tax refunds are issued in less than 21 days, some tax returns may require additional review and may take longer.

 2: Calling the IRS or My Tax Professional Will Provide a Better Refund Date

According to IRS, many people mistakenly think that talking to the IRS or calling their tax professional is the best way to find out when they will get their refund. However, the best way to check the status of a refund is online through the “Where’s My Refund?” tool at IRS.gov or via the IRS2Go mobile app. The IRS updates the status of refunds once a day, usually overnight, so checking more than once a day will not produce new information. For an explanation of refund status announcements, check out this prior post.

Myth 3: Ordering a Tax Transcript a “Secret Way” to Get a Refund Date

Ordering a tax transcript will not help you find out exactly when you might get your refund. The information on a transcript does not necessarily reflect the amount or timing of a refund. While you can use a tax transcript to validate past income and tax filing status for mortgage, student, and small business loan applications and to help with tax preparation, you should use “Where’s My Refund?” to check the status of their refund. The codes that you’ll see on your tax transcripts do not offer additional information about when your refund will be issued.

Myth 4: “Where’s My Refund” Must be Wrong Because There’s No Deposit Date Yet

The “Where’s My Refund?” tool will be updated with projected deposit dates for early EITC and ACTC refund filers a few days after February 15. Those taxpayers claiming EITC or ACTC will not see a refund date until then. The IRS, tax preparers and tax software will not have any additional information on refund dates.

Myth 5: Delayed Refunds, those Claiming EITC and/or ACTC, will be Delivered on February 15

Remember that the new law will not allow the IRS to release tax refunds until after February 15. That does not mean that refunds will be available on that date. In addition to normal processing times for banks, remember that President’s Day weekend may impact when you get your refund. The IRS cautions that delayed refunds may not start arriving in bank accounts or on debit cards until the week of February 27, assuming that there are no processing issues with your tax return and you choose direct deposit.

That’s it. There are no magic codes, keys or other tricks to getting your tax refund faster this tax season. The IRS encourages taxpayers who are expecting tax refunds to file as early as possible, using e-file and direct deposit.

If You Owe Taxes To IRS, You Could Lose Your Passport And Your Ability To Fly

 

Posted: 26 Jan 2017 06:51 PM PST

If you’re like me, your calendar is already filling up – and it’s just January. If those plans include travel, you need to be aware of a new law which could affect your future plans.

On December 4, 2015, the Fixing America’s Surface Transportation Act, or “FAST Act,”  became law. The purpose of the law was to provide long-term funding for transportation projects, including new highways. However, the Act also included a significant new provision which allows the Department of State (sometimes just called “State Department”) to yank passports from delinquent taxpayers.

Here’s how it works. The Internal Revenue Service (IRS) doesn’t have control over passports: that’s the purview of the State Department. Tax debts are assessed by the IRS: the State Department doesn’t generally have access to taxpayer information because of privacy laws.

To bridge the two, the law now requires the IRS to advise the State Department about seriously delinquent taxpayers. The State Department may then refuse to issue or renew a passport for a seriously delinquent taxpayer; the Secretary of State is also permitted to revoke any passport previously issued to a seriously delinquent taxpayer.

For purposes of the new law, a “seriously delinquent” tax debt is defined as “an unpaid, legally enforceable federal tax liability” greater than $50,000, including interest and penalties. The $50,000 limit will be adjusted each year for inflation and cost of living. The limit is not per year but cumulative meaning that it’s the total tax debt that matters.

There are some exceptions under the law. Tax debt which is being paid on time as part of an installment agreement or under an Offer In Compromise doesn’t count. It also doesn’t include any tax debt for which a Collection Due Process hearing is timely requested in connection with a levy or a debt where the collection has been suspended due to an innocent spouse claim.

If you’re seriously delinquent under the new law, the IRS is required to notify you in writing at the time that it certifies the debt to the State Department. The State Department will then hold your passport application or renewal for 90 days to allow you to resolve any errors, make full payment, or enter into a satisfactory payment plan. There is no grace period for resolving your debt before the State Department revokes an existing passport.

To get off the list, you must prove that the debt is fully satisfied, is legally unenforceable or is not seriously delinquent tax debt under the statute (in case you’re wondering, that does not include debt that dips below $50,000 – once you’ve hit that threshold, you must either pay it down or meet one of the other criteria).

That feels like the end of the story. You might be thinking if you have some tax debt, maybe you’ll just decide not to vacation in Belize for a bit.

But what if just you want to go to Nashville? Or Boston? That’s where things get tricky. Under another law – this one from 2005, the REAL ID Act – federal agencies cannot accept driver’s licenses and identification cards issued by states that do not meet certain standards.

As of January 22, 2018, all travelers with a driver’s license or identification card issued by a state that does not meet those standards must present an alternative form of identification acceptable to the Transportation Security Administration (TSA) unless that state has an extension. The list of acceptable identification includes a passport.

You can check the status of your state for REAL ID Act purposes using our handy map:

Source: dhs.gov

Wooo HOOOO….Pennsylvania is NON compliant!!!

Those rebels….

Safeguarding Taxpayer Data: Create Strong Passwords

U.S. Department of Homeland Security Seal

Passwords are often the key to the identification and authentication process for access to your computer, email and encrypted information, both received and transmitted. For this reason, it is critical to your business and the security of your client data that you have strong passwords and that you protect those passwords.

Here are some things you should consider in creating and protecting passwords:

  • Longer passwords are safe and more difficult to guess. A strong password should be a minimum of eight characters. It should include a combination of letters, numbers and symbols or special characters. Your password should include at least one uppercase letter, one lowercase letter, one number and one symbol or character.
  • Personal information should not be included in your passwords.  Names of siblings, children, pets, etc., are generally available on social media, which makes it easier for cybercriminals to figure out your password.
  • Avoid using the same password for all of your information systems, accounts or devices. If someone does guess one password, they will not have access to all your systems, devices or data.
  • Substitute numbers and symbols for letters in words or phrases to make it more difficult to guess a password.
  • Do not share your password and be careful of attempts to trick you into revealing your password.

 

Toolkit Materials by Cyber Topic

Attachment Size

 

Attachment Size
 Social Media Guide 180.59 KB
 Internet of Things Tip Card 146.25 KB
 Cybersecurity While Traveling Tip Card 149.32 KB
 Chatting with Kids about Being Online Booklet 4.89 MB
 Parents and Educators Tip Card 154.11 KB
 Mobile Security Tip Card 156.06 KB
 Seguridad Cibernética Para Los Niños 281.79 KB
 Best Practices for Creating a Password 262.54 KB
 Best Practices for Using Public WiFi 215.71 KB
 Identity Theft and Internet Scams 359.92 KB
 Mobile Banking and Payments 227.88 KB
 Online Gaming 301.16 KB
 Online Privacy 226.48 KB
 Reporting a Cybercrime Complaint 187.17 KB
 Insider Threat 447.96 KB
 Malware 354.77 KB
 Five Every Day Steps Towards Online Safety 235.9 KB
 Five Ways to be Cyber Secure at Work 232.38 KB
 How to Recognize and Prevent Cybercrime 245.29 KB
 Five Steps to Protecting Your Digital Home 202.05 KB
 Your Part in Protecting Critical Infrastructure 243.66 KB
 Phishing 253.68 KB

8 Little-Known Tax Deductions You Should Prep for This New Year

By Meredith Wood, Fundera – January 11, 2017

8 Little-Known Tax Deductions You Should Prep for This New Year

Start preparing now to save money next tax season by accounting for these tax-deductible business expenses.

Many small business owners aren’t aware, but they’re often eligible for lots of different tax deductions from the government.

Sure, most entrepreneurs know to deduct expenses like employee salaries and benefits, the cost of goods sold, and rent. But there are some more unusual opportunities for small business owners, too.

It can be difficult to figure out exactly which deductions you qualify for—especially if you don’t keep meticulous records or set aside time to pore over your expenses—but any tax deduction you don’t take advantage of is just money left on the table.

So, when tax season comes knocking, refer to this list of eight little-known tax deductions you should be aware of—and save money for your small business.

1. Utilities

You might already be well aware that you can deduct your business’ rent payments from your taxes—and even if you work from home, you can calculate a percentage of your rent to deduct based off of how much space you use for your business.

But did you know you should be deducting your utilities payments, too?

From telephone calls to electricity and water bills, your small business is eligible to save money here. However, you do need to make sure that you’re only deducting business expenses and not personal ones. Keep records of business versus personal phone calls when deducting from your telephone bill, and save your utilities bills as well.

2. Insurance

Business insurance is generally not a bad idea: Nine times out of 10, you’ll be extremely glad you made those small monthly payments if something unexpected occurs.

And as an added bonus, many types of business insurance are actually tax deductible. From health insurance to workers’ compensation, make sure you put these premium payments on your tax forms next year.

3. Equipment & Machinery Payments

There are plenty of good reasons to rent your equipment and machinery instead of buying them. From upgrade flexibility to lower upfront costs, and even the possibility of financing, it can be a compelling option.

One more advantage: You can deduct your rental payments from your taxes. (Plus, you can also deduct any repairs you need to make as well.)

4. Car Expenses

When it comes to your vehicle, there are a few different tax deductions that many small business owners forget about.

You can use the standard mileage rate—57.5 cents per mile as of 2015—to deduct the amount you drive for business purposes.* Or, if you don’t take the mileage deduction, you can deduct the actual expenses related to a business use of your car, van, truck, or any sort of motor vehicle:

  • Parking fees
  • Advertising decals
  • Union member trips
  • Gas and oil
  • Tire maintenance
  • General auto repair
  • Registration fees

If you’re not the type of person who can keep up a consistent, accurate log of everywhere you drive, to the 10th of the mile, every day—not to worry. Here’s a great guide to calculating your business auto expenses for the tax deduction you deserve.

5. Office Supplies & Furniture

That’s right: You can deduct both office supplies and office furniture.

As a small business owner, you know all too well how small expenses stack up. Paperclips, thumb tacks, staples, pens and pencils, paper, notebooks, post-its, printer cartridges—all these supplies and more are tax deductible for small business owners.

And save your receipts for the slightly bigger purchases, too. Got a nice chair or couch for your home office so clients can wait in comfort? Dished out cash for additional chairs, desks and electronics for those new employees you hired? These expenses can all come out of your taxes as well.

6. “Entertainment”

Depending on the type of small business you run, this might sound like a joke—or a blessing.

If part of running your business involves taking clients out to meals, theater events, concerts or clubs, baseball games, or anything like that, then don’t simply consider that money to be an acquisition cost. It’s possible to deduct up to half of those expenses for your business.

The IRS will want to see that these expenses are clearly for business purposes that are necessary, appropriate and helpful. But if that sounds like you, then make sure to mark these outings for future savings.

7. Interest Payments

Got a mortgage, small business loan or business credit card?

That’s right—those daily, weekly or monthly interest payments are also tax deductible for small businesses. These savings can be a huge boon to entrepreneurs who are growing their businesses with debt.

And what’s better than an already-itemized list of tax deductions for you to simply add onto your tax forms or send over to your accountant?

8. Business Taxes

Surprised?

Many small business owners aren’t aware of this, but your business taxes are actually tax deductible on their own. From federal, state and local taxes to income, real estate (including purchases and sales), employment (including social security and Medicaid payments), self-employment and sales taxes (including resale merchandise and depreciation costs), these expenses are well worth recording for those future savings.

The Bottom Line

The more you save on taxes, the more money you get to put right back into your small business. Use these tax deductions to take advantage of the ability the government gives you to manage a growing, thriving business.

For more expert advice, visit Manta’s guide to Taxes for Small Business

Meredith Wood is the head of content and editor-in-chief at Fundera, an online marketplace for small business loans. Prior to Fundera, Meredith was the CCO at Funding Gates. Meredith manages financing columns on Inc, Entrepreneur, Huffington Post and more, and her advice can be seen on Yahoo, Daily Worth, Fox Business, American Express OPEN, Intuit, the SBA and many more.

* CORRECTION: This article was updated to clarify the following: You can take the standard IRS mileage deduction, or you can deduct the actual expenses of operating a business vehicle, but you can’t deduct both mileage and actual expenses. 

Bogus IRS Calls Topped List Of Most Reported Scams In 2016

Callers posing as agents from the Internal Revenue Service (IRS) attempting to collect bogus tax debts topped the list of the most reported scams of 2016, according to the Better Business Bureau. Those IRS phone scams accounted for 1 in 4 reported scams last year.

As part of the scam, callers dialed up potential victims while impersonating agents from the IRS or U.S. Citizenship and Immigration Services (USCIS). Calls were typically made using VoIP (voice over internet protocol) technology that allowed the scammers to “spoof” the phone numbers, making it appear that the calls were coming from the IRS or other government agency. After convincing numerous taxpayers that they needed to pay up or face punishment, thieves were able to make off with millions of dollars in stolen money. The U.S. Treasury Inspector General for Tax Administration J. Russell George reported that his agency alone had received over 2 million contacts from individuals who received these kinds of solicitations and approximately 10,000 people acknowledged that they were victims. The largest single amount paid as a result of the IRS impersonation scam as charged in the indictment is $136,000, paid by a victim in California.

The scam, which started making the rounds in 2013, topped the list in 2016, just as it did in 2015. However, there is some good news: according to the Better Business Bureau’s Scam Tracker, the numbers of IRS-related scam complaints have dropped dramatically since mid-December. That may be because of dozens of arrests made in late October as part of a multi-year, multi-agency investigation into the IRS-impersonation scams.

The nine kinds of scams that round out the top ten in 2016 – after those IRS-impersonation scams – were:

2. Debt Collections
3. Sweepstakes/Prizes/Gifts
4. Online Purchase
5. Employment
6. Government Grant
7. Tech Support
8. Advance Fee Loan
9. Fake Check/Money Order
10. Phishing

The government grant scam noted in the list sometimes has a tax component as well. According to a recent complaint filed with the Better Business Bureau, it works as follows: the consumer receives a notification that they have been awarded a government grant. To collect, the scammer advises that they need certain personal information from the consumer, which may include Social Security numbers and birth dates. In addition, to claim the money, the consumer is told they must pay a filing fee. After the scammers receive the fee, they demand more money from the consumer, insisting that the IRS has stopped the transfer of grant money because tax is due.

The federal government advises caution when responding to grant notifications. You should be aware that the government does not contact individuals to award grants for which there has been no application and the government does not charge a fee for applying for a federal grant. Additionally, federal grants are usually awarded for specific programs, research or projects, most often to local governments, organizations, institutions and universities, and not to individuals.

With all of the scams out there, how can you protect yourself? The Better Business Bureau offers the following ten tips:

1. Never send money to someone you have never met face-to-face.
2. Don’t click on links or open attachments in unsolicited email.
3. Don’t believe everything you see.
4. Don’t buy online unless the transaction is secure.
5. Be extremely cautious when dealing with anyone you’ve met online.
6. Never share personally identifiable information with someone who has contacted you unsolicited, whether it’s over the phone, by email, on social media, even at your front door.
7. Don’t be pressured to act immediately.
8. Use secure, traceable transactions when making payments for goods, services, taxes, and debts.
9. Whenever possible, work with local businesses that have proper identification, licensing, and insurance, especially contractors who will be coming into your home or anyone dealing with your money or sensitive information.
10. Be cautious about what you share on social media and consider only connecting with people you already know.

2017 Tax Filing Season Begins Jan. 23 for Nation’s Taxpayers, Tax Returns due April 18

April 18 is When Your Taxes are Due in 2017    

WASHINGTON ― The Internal Revenue Service announced today that the nation’s tax season will begin Monday, Jan. 23, 2017 and reminded taxpayers claiming certain tax credits to expect a longer wait for refunds. 

The IRS will begin accepting electronic tax returns that day, with more than 153 million individual tax returns expected to be filed in 2017. The IRS again expects more than four out of five tax returns will be prepared electronically using tax return preparation software.

 Many software companies and tax professionals will be accepting 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 IRS to begin accepting e-filed returns.

 The IRS reminds taxpayers that a new law requires the IRS to hold refunds claiming the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) until Feb. 15. In addition, the IRS wants taxpayers to be aware it will take several days for these refunds to be released and processed through financial institutions. Factoring in weekends and the President’s Day holiday, the IRS cautions that many affected taxpayers may not have actual 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. “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.”

 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.

 April 18 Filing Deadline

The filing deadline to submit 2016 tax returns is Tuesday, April 18, 2017, rather than the traditional April 15 date. In 2017, April 15 falls on a Saturday, and this would usually move the filing deadline to the following Monday – April 17. However, Emancipation Day – a legal holiday in the District of Columbia – will be observed on that Monday, which pushes the nation’s filing deadline to Tuesday, April 18, 2017. Under the tax law, legal holidays in the District of Columbia affect the filing deadline across the nation.

 “The opening of filing season reflects months and months of work by IRS employees,” Koskinen said. “This year, we had a number of important legislative changes to program into our systems, including the EITC refund date, as well as dealing with resource limitations. Our systems require extensive programming and testing beforehand to ensure we’re ready to accept and process more than 150 million returns.”

 The IRS also has been working with the tax industry and state revenue departments as part of the Security Summit initiative to continue strengthening processing systems to protect taxpayers from identity theft and refund fraud. A number of new provisions are being added in 2017 to expand progress made during the past year.

 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 still anticipates issuing more than nine out of 10 refunds in less than 21 days, but there are some important factors to keep in mind for taxpayers.

Beginning in 2017, a new law requires the IRS to hold refunds on tax returns claiming the Earned Income Tax Credit or the Additional Child Tax Credit until mid-February.

Under the change required by Congress in the Protecting Americans from Tax Hikes (PATH) Act, the IRS must hold the entire refund — even the portion not associated with the EITC and ACTC — until at least Feb. 15. This change helps ensure that taxpayers get the refund they are owed by giving the IRS more time to help detect and prevent fraud.

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 EITC and ACTC.

 

The IRS will begin releasing EITC and ACTC refunds starting Feb. 15. However, the IRS cautions taxpayers that these refunds likely won’t arrive in bank accounts or on debit cards until the week of Feb. 27 (assuming there are no processing issues with the tax return and the taxpayer chose direct deposit). This additional period is due to several factors, including banking and financial systems needing time to process deposits.

After refunds leave the IRS, it takes additional time for them to be processed and for financial institutions to accept and deposit the refunds to bank accounts and products. The IRS reminds taxpayers many financial institutions do not process payments on weekends or holidays, which can affect when refunds reach taxpayers. For EITC and ACTC filers, the three-day holiday weekend involving President’s Day may affect their refund timing.

 

Where’s My Refund? ‎on IRS.gov and the IRS2Go phone app will be updated with projected deposit dates for early EITC and ACTC 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. The IRS, tax preparers and tax software will not have additional information on refund dates, so Where’s My Refund? remains the best way to check the status of a refund.

 

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.

 

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 on that date.

 

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 as much as 11 weeks during tax season, which runs from mid-January through April.

 

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.