Are you ready for tax season? Because the IRS is ready for you! The 2017 individual income tax filing season opens on Monday, Jan. 23, and the IRS expects more than 153 million tax returns to be filed this year. Here are a few things to know as you prepare to file.
Tax season is three days longer this year. With April 15 falling on a Saturday and Emancipation Day recognized on Monday, individual income tax returns are due on Tuesday, April 18 this year.
Several due dates have changed: many payroll tax returns, along with 1099-misc forms, are now due on Jan. 31 — not just to employees and contractors, but to the government as well. In addition, partnership returns are now due in March and Foreign Bank Account Reporting is now due in April to coincide with the personal income tax return deadline.
Expect refund delays for returns with refundable credits like the Earned Income Tax Credit, Child Tax Credit, Additional Child Tax Credit and American Opportunity (education) Tax Credit. IRS is attempting to crack down on the rampant fraud associated with these credits, so returns including these credits will not be processed until at least February 15. Combined with the earlier due dates for payroll tax returns, this gives IRS the opportunity to verify information for taxpayers claiming these credits before issuing any checks.
In addition to IRS doing more due diligence on returns with refundable credits, they are requiring tax professionals to do more due diligence as well. Be prepared to prove claims for refundable credits with credible information from third party sources. Since preparer penalties are severe and have been expanded to cover all refundable credits, expect your tax pro to ask more questions and require more documentation.
The IRS is also trying to tamp down tax-related identity theft by putting more controls in place to secure your data. The good news is that this appears to be working; the bad news is that it makes working with IRS even more difficult. Be prepared to share your entire life story with them if you choose do deal with them in person.
Finally, as the saying goes, elections have consequences. There aren’t many changes to consider when filing this year, but there could be a lot of changes on the horizon. No one seems to agree what the phrase “tax reform” actually means, but everyone seem to think it’s coming and that could make it interesting when filing your 2017 return next year.
If this all sounds complicated, that’s because it is, and that’s why you need a tax professional in your corner — we keep up with all this stuff so you don’t have to.
To stay up-to-date on these and other tax issues, follow us on twitter (@TropicalTax) and sign up for a free e-newsletter at www.TropicalTax.com.
Jerry Gaddis is Founder & CEO of Tropical Tax Solutions, a full service firm headquartered in Key Largo offering Tax Consultation, Preparation and Representation services. Mr. Gaddis, a Dave Ramsey Endorsed Local Provider, is Enrolled to Practice Before the Internal Revenue Service and a Fellow in the National Tax Practice Institute. He earned degrees from the University of Florida and the Crummer Graduate School of Business at Rollins College in Winter Park, FL. He’s been in the tax business since 2004 and you can reach him at www.TropicalTax.com .