Global Tax Insights
Tax Season Starts January 23rd, 2017January 16, 2017
Tax season begins January 23rd—are you prepared? There may be some delays with refunds this year—read on to find out more.
The Internal Revenue Service (IRS) said it will begin accepting 2016 tax returns on January 23rd. and the deadline for 2016 returns will be Tuesday, April 18th (due to the 15th landing on a Saturday, and with Monday being Emancipation Day in Washington, D.C.)
A bit more on the 2016 Tax Season
According to the IRS, more than 153 million individual tax returns are expected to be filed in 2017. Electronic tax returns are accepted beginning January 23rd and the IRS expects that 4 out of 5 tax returns will be filed electronically.
Is there a benefit to completing your return closer to January 23rd?
There are a few benefits to preparing 2016 returns earlier rather than later—namely blocking identity theft more successfully by filing before a fraudster can. It also gives everyone more time to find missing information or address other questions. And lastly, you can put the task behind you and enjoy the coming spring weather.
What about refunds?
For taxpayers claiming certain tax credits, the wait for refunds could be a bit longer than usual.
What credits exactly?
Refunds will be held until February 15th for those claiming the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC). This delay, coupled with processing time and the President’s holiday might result in taxpayers not having access to their refunds until February 27th, the IRS says.
However, taxpayers claiming these credits should not stall in filing, the IRS says.
How can I get my refund as quickly as possible?
E-filing returns and choosing direct deposit for refunds remains the fastest and safest way to file a tax return and receive a refund.
Reminder about retaining last year’s return
You need to keep copies of your prior-year tax returns for a minimum of three years.
Heightened security this season
By holding refunds on returns claiming the EITC and ACTC, the IRS hopes to have more time to help detect and prevent fraud. In addition to this, the IRS has joined with representatives of the software industry, tax preparation firms, payroll and financial product processors, and state tax administrators to form a “Security Summit”. The group has new safeguards in place for 2017 to help stop identity theft, including:
- Focus on “the trusted customer” to help ensure the authenticity of taxpayers and tax returns before, during and after a return is filed.
- Additional data elements in backgrounds of tax software programs that will keep information secure. 37 new data elements will be transmitted by the tax industry with every return this season, which will allow professionals to be confident that the real taxpayer is behind the filed return.
- A new Identity Theft Tax Refund Fraud Information Sharing and Analysis Center- an early warning system that pinpoints new identity theft schemes and shares that information as quickly as possible with Summit partners so that safety measures can be put in place.
- A new initiative aimed at flagging suspicious refunds before they are deposited into taxpayers’ accounts.
- A new process (which 23 states have signed onto) for financial institutions that helps identify suspicious state tax refunds and return them to the state for validation.
- A W-2 “Verification Code Test” which will be tested on about 50 million returns. These select taxpayers will receive a 16 digit code that will be transmitted with the tax return in an effort to validate the taxpayer’s identity and the information on the form.
The IRS is also urging taxpayers to remember to check a tax preparer’s professional credentials before trusting them with your files, and to otherwise be vigilant about always protecting your personal information.
Questions on this filing season? Our tax team can help—call us today.