2023 Tax Filing Important Tax Deadlines and Dates Calendar When are 2022 taxes due? The…
Starting in 2017, tax refunds that include an Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) will be held until February 15.
On December 18, 2015, Congress passed the PATH (Protecting Americans from Tax Hikes) Act which made over 20 tax provisions permanent, including tax credit expansions to the EITC, ACTC, and American Opportunity Tax Credit (AOTC) that were set to expire in 2017. The PATH Act also requires a change in the issuing of EITC and ACTC refunds.
Beginning in 2017, no refund will be made to a taxpayer before February 15 if the taxpayer claimed the Earned Income Tax Credit or Additional Child Tax Credit on the return. This will allow the IRS to verify income reported on those returns since employers are now required to file W-2 forms and 1099s by January 31 (previously they had until March).
Most refunds are expected to be issued within 21 days of processing. If the IRS identifies significant mismatches between the income information provided on the return and provided by employers, there can be additional delays as the IRS seeks to resolve the mismatch.
The IRS anticipates more than 153 million tax returns will be filed this year. Taxpayers will have until Tuesday, April 18, 2017, to file their 2016 tax returns and pay any taxes they owe, thanks to the Emancipation Day holiday in Washington, D.C., that Monday.
However, taxpayers and tax practitioners should brace for delays on refunds for tax returns that claim either the Earned Income Tax Credit or the Additional Child Tax Credit. The IRS expects to issue more than nine out of 10 refunds in less than 21 days. But the Protecting Americans from Tax Hikes Act, or PATH Act, requires the IRS hold refunds on tax returns claiming the EITC or the ACTC until mid-February to give the IRS more time to help detect and prevent tax fraud.
The IRS plans to begin releasing EITC and ACTC refunds starting February 15 but cautions taxpayers the refunds probably will not start showing up in bank accounts or on debit cards until the week of February 27. It will take extra time for the refunds to be processed and for financial institutions to accept and deposit the refunds to bank accounts, the IRS cautioned. 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 could also affect the timing of their tax refunds.
Koskinen encouraged taxpayers and tax professionals not to hold back on filing the tax returns, however. The IRS will continue to process the returns, even if it won’t be allowed to issue the refunds until February 15.
“Taxpayers claiming the EITC or ACTC should file as soon as they have all of the necessary documentation together to prepare an accurate return,” he said. “In other words, file as you normally do.”
Koskinen also had a special caution for taxpayers who use Individual Taxpayer Identification Numbers, or ITINs, instead of Social Security numbers on their tax returns. “Beginning this week, any ITIN not used at least once on a tax return in the past three years will no longer be valid for use on a return,” he said. “In addition, ITINs with middle digits 78 or 79 also expired as of January 1st. So if you have an expiring ITIN and need to file a return in 2017, it’s extremely important to renew your ITIN as soon as possible. Here’s why it’s critical not to delay: It can take seven weeks or more from the time you send in Form W-7, the renewal application, for the IRS to process the application and notify you about your status. Those who fail to renew before filing a tax return could face a delayed refund, and they may also be ineligible for some important tax credits. So I would urge people to file that renewal application right away, to avoid any delays. For more information, and to get answers to frequently asked questions, visit our ITIN page on IRS.gov.”
He also had an important reminder for taxpayers who file electronically with their own tax software. “If you’re changing tax software products this filing season, make sure you have a copy of your prior-year return on hand,” he said. “You may be asked to enter your 2015 adjusted gross income. This helps verify your identity before you e-file. We’re no longer offering the Electronic Filing Personal Identification Number, or e-File PIN, as an alternative. So, plan ahead and locate last year’s return.”
As part of the continued crackdown, the IRS said it will expand what’s called a “Form W-2 Verification Code” initiative that began last year.
About 50 million W-2 forms will include a 16-digit verification code that tax filers or preparers will need to add when prompted by tax software. About two million W-2s had such code during the 2016 filing season.
The IRS anticipates that the verification code ultimately will be used on all W-2 forms in future years.
Koskinen said the verification code can help the IRS validate that the W-2 itself is authentic and that the real taxpayer is filing the return.
He said consumers should not end up waiting longer for a refund because of the W-2 verification process. Instead, the new coding could help the IRS process legitimate returns more quickly, he said.
The IRS said more fraud is being stopped at the door before fake returns are even processed and refund money is issued to criminals.
One sign of success, according to the IRS, is that fewer taxpayers filed their returns this year and then suddenly discovered that their name and Social Security number had been used already to file a fake tax return.
The evidence: The IRS said the number of affidavits filed involving tax-related ID theft was cut in half during the first nine months of 2016, compared with the same period the year before. The IRS said 237,750 affidavits were filed during the first nine months, compared with 512,278 during the same time in 2015.
Through September, the IRS said it stopped 787,000 confirmed identity theft returns, which claimed refunds of more than $4 billion. During the same time last year, the IRS stopped 1.2 million confirmed ID theft returns, claiming about $7.2 billion.
Order would put an end to Navient’s years of abuse of students and taxpayers in…
Running a home-based business comes with many perks—flexibility, no daily commute, and the comfort of…
Tax season can be a time of anticipation and excitement, especially when you’re expecting a…
It's that time of year again – Tax Day 2024 is here! Today is the…
The Protecting Americans from Tax Hikes (PATH) Act was created in order to protect taxpayers…
The IRS’s “Where’s My Refund?” tool will be updated by February 17, 2024, for many…
This website uses cookies.