The IRS announced this week that it had started accepting and processing 2016 tax returns. This year you have until April 18, 2017 to file and pay any taxes due to avoid penalties.
The later deadline this year is because the 15th falls on a Saturday. On Monday, April 17 federal offices are closed in observation of Emancipation Day, a D.C. holiday. A six-month extension request will come with an October 16, 2017 deadline.
Expect refund delays
Estimates by the agency are that about 70 percent of taxpayers overpay on their taxes throughout the year and receive tax refunds. Last year, the average refund was $2,860 on the 111 million refunds issued.
Those who claim the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) will not likely see their refunds until the week of February 27th. This is due to a provision in the Protecting Americans from Tax Hikes (PATH) Act that requires the IRS to hold the entire refund until February 15 if EITC or ACTC are claimed. This is an effort to combat fraud that targets these credits. A weekend and holiday contribute to additional delays.
When things go wrong with a refund, you can ask that the IRS correct the problem. If no action is taken, you can then file a lawsuit.
Identity theft refund fraud
New measures will go into effect to protect personal information and tax software accounts. Much of these efforts are behind the scenes and have been put in place through partnership between the IRS, the Massachusetts Department of Revenue and the tax industry.
Those whose personal information may have been compromised may be issued Individual Taxpayer Identification Numbers (ITINs). These numbers are also important, if you do not have a Social Security number.
If a number has not been used in the past three years it will need to be renewed. Also ITINs with 78 or 79 as middle digits have expired. It can take up to 11 weeks to complete the renewal process, so this must be started soon.
Now is the time to begin gathering information and to schedule a meeting with an accountant. For small business owners and those with complicated financial portfolios, it is critical to seek competent advice. When issues arise related to offshore account disclosures or business deductions, consult a tax attorney for additional guidance.