If one of your New Year's resolutions was to plan better for your taxes or simply to file your tax return earlier this year - good for you! With 2017 came a lot of changes to IRS systems and process and therefore changes to your tax return. Some of the changes are required by laws and others because of new security measures - regardless of the cause here is what you need to know.
Safety first! The IRS indicated, "The 2017 safeguards are aimed at those of you who prepare your own federal and state tax returns using tax software." Though many of the safeguards happen behind the scenes and you won't need to do anything, there are some services and self-help tools that will require you to use Secure Access. Secure Access is designed to protect your data and IRS systems from thieves. You must have a mobile phone, an email address, and various pieces of your personal information to register. Plan ahead and review the article Tips for Successfully Authenticating Your Identity through Secure Access on the IRS website. If you prepare your own tax return and plan to file electronically, you will need much of the same information listed and your prior year adjusted gross income (AGI) or prior-year Self-Select PIN; you will no longer be able to use an electronic filing PIN. If you use a Tax Pro, they should collect only the appropriate data needed to file your tax return and manage the safeguards for you.
Despite some rumors to the contrary, the Affordable Care Act is NOT dead for 2016, which means a) You had to have insurance for the entire year, b) Qualify for an exemption, or c) May be subject to a penalty. For many people, the various Forms 1095 contains the information they need - who was covered and when. However, the deadline for issuing the form depends on who is issuing it: Form 1095-A, issued by the Health Insurance Marketplace must be provided by January 31, 2017, but both Form 1095-B, which is issued by health insurance providers, and Form 1095-C, issued by certain employers for self-insured coverage, aren't due until March 2, 2017. According to the IRS, for those that obtained insurance through the Marketplace it is important to receive Form 1095-A before you file your tax return; however, you do not need to include the form with your tax return. If you aren't sure how to prepare your tax return correctly with regard to the ACA information, consult your Tax Pro or review the information on the IRS Affordable Care Act Tax Provisions page.
Tax refunds, some of the biggest ones, are often a result of the Earned Income Tax Credit (EITC) and/or the Child Tax Credits (CTC/ACTC). One of the changes that will have the biggest impact on taxpayers is a result of the Protecting Americans from Tax Hikes (PATH) Act of 2015. Among other things, the PATH Act requires the IRS to hold refunds for returns that claim the EITC or the CTC/ACTC until February 15. The IRS has been releasing various posts, articles, and tweets about the refund delays and how they should help stop fraudulent returns. For frequently asked questions, see Refund Timing for Earned Income Tax Credit and Additional Child Tax Credit Filers on the IRS website. However, just because the IRS won't process your refund until February 15 does not mean that you shouldn't file your return early though. The sooner you get your tax return filed, the sooner you don't have to worry about it anymore and the less likely you are to be a victim of Tax ID Theft.
For people without a Social Security number and who must file a tax return, an Individual Tax Identification Number (ITIN) is required. Many ITINs expired December 31, 2016 either because they were not used for a tax return in 2013, 2014, or 2015, they were issued before 2008, or the middle digits were 78 or 79. If your ITIN expired, processing of your tax return will be delayed and if the delay is beyond April 18, you could lose the Child Tax Credits and the American Opportunity Credits. You must have an SSN for yourself, your spouse and your dependents as of April 18, 2017 to claim EITC on your 2016 tax return.
If you are looking for help, the IRS urges you to start with IRS.gov for all their resources. If you want in-person help, all IRS Taxpayer Assistance Centers are now by appointment only. With the changes in the tax law, the new security safeguards, and the delayed processing of returns, this might be the year to hire a Tax Pro. And if one of your goals for 2017 is to keep more of your money in your pocket, investing in a Tax Pro might just be one of the most economical - time and money wise - decisions you make that will help you reach your goals.
Like it or not, it is tax time! Give a bit more thought to what can be your single biggest financial transaction this year; it is your money, keep more of it.