The Internal Revenue Service (IRS) recently announced that the U.S. tax filing season will begin Monday, January 23rd, 2017. Additionally, the tax authority also reminded taxpayers about the changed deadline for various U.S. tax forms and delay in certain tax refunds due to the Protecting Americans from Tax Hikes Act (PATH).

With the 2017 tax filing season being a month away from now, here is what taxpayers should be prepared for:

Delayed Earned Income Tax Credit (ECTC) & Additional Child Tax Credit (ACTC) Refunds

There will be a delay in the processing of Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) until the 15th of February. This change helps ensure that taxpayers get the refund they are owed by giving the IRS more time to help detect and prevent fraud. Taxpayers could expect their refund to be accessible starting in the week of February 27th.

Extended Tax Filing Deadline

U.S. individual income tax returns are expected to be filed by the 15th of April. This is, generally extended if the 15th of April falls on a weekend. For the year 2017, the 15th of April is a Saturday, and Monday, the 17th of April, is Emancipation Day, a legal holiday in the District of Columbia. This results in extending the 2017 U.S. tax filing deadline to Tuesday, 18th of April, providing U.S. taxpayers an additional 3 day period to file their U.S. income tax returns.

New Deadlines for W-2, 1099-Misc & Other Tax Information Forms

The PATH Act has also resulted in changes to the deadlines for many tax forms. Although the deadline for providing the forms to the recipients has not changed, new deadlines have been imposed for providing the forms to the IRS. This was put in place, so the IRS can verify information included on the returns.

Many of these deadlines are early by a month. For example: Employers needs to provide Form W-2 Social Security Authority (SSA) by the 31st of January instead of 28th February. Form 1099-Misc, also needs to be filed by the 31st of January if there is an amount reported in Box 7: Nonemployee Compensation.

This early deadline for several forms could result in a rush at the tax preparer’s office. Therefore, it is highly recommended that business owners start working with their tax professionals/ accountants at the earliest possible time, to have these forms accurately prepared and timely filed. Missing the deadline and/or incomplete, or inaccurate filing could result in penalties.

W-2 Verification Code & Other Tax Identity Theft Prevention Measures

To prevent identity theft and fraud refund claims, the IRS along with its Security Summit partners introduced a 16-character alphanumeric verification code to IRS Form W-2 along with other tax measures. For 2016, a pilot W-2 verification code program will be carried out to check the feasibility of this identity theft measure. Therefore, some taxpayers may have to enter this code found on their Form W-2 to authenticate their W-2 form.

IRS Identity Protection PIN (IP PIN)

The IP PIN is a 6-digit number assigned to taxpayers to help prevent the misuse of their Social Security Number on fraudulent federal income tax returns. For 2016, IP PINs were assigned to:

  • Victims of identity theft
  • Participants of the IP PIN pilot for residents of Florida, Georgia, or the District of Columbia.

The IRS sends a new IP PIN every tax year to certain taxpayers by post before the tax filing season begins. Taxpayers who received a CP01A Notice in December, can find the ‘IP PIN’ located at the bottom of the left column of the notice.

Those affected are required to use this IP PIN to confirm their identity while filing their current tax return and/or any delinquent returns during that year.

Verification of E-Filed Return through 2015 Adjusted Gross Income (AGI)

Taxpayers who change their tax software products for the 2017 tax filing season to file their 2016 income tax return will need to verify their 2015 Adjusted Gross Income (AGI) figure before submitting their tax return electronically. For this, the taxpayer will need to electronically sign the return by creating a five-digit self-selected PIN.

To verify this PIN, the taxpayer will be asked for their date of birth, and additionally, either their previous tax return’s AGI amount or the previous self-selected PIN.

For returning customers, the software automatically generates and adds this information, while those who change their software product would manually need to enter this information.

Taxpayers missing their previous year’s return copy need not worry, as they can use the IRS’ ‘Get Transcript Online’ to immediately view their AGI. However, for this they will need to pass the Secure Access identity verification process.

Help for Taxpayers

To make it easy for taxpayers to prepare and file their tax return, the IRS has authorized several community volunteers to help taxpayers prepare and file their tax return. More details on this can be obtained from the irs.gov website.

In addition, almost 70% of U.S. taxpayers are eligible to use IRS Free File service. Taxpayers with income equal to or less than $64,000 can rely on IRS commercial partners offering free brand-name software.

Furthermore, the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) offer free tax help to taxpayers who qualify. To know more about these services and find a nearby VITA or TCE site, taxpayers are advised to visit the IRS website (irs.gov), and enter “free tax prep” in the search box. This information is also available on IRS mobile application ‘IRS2Go’.

 

IRS Commissioner John Koskinen advises that U.S. taxpayers should be more prepared than ever this tax season (2016 tax filing) due to the early deadlines and introduction of new measures and steps to prevent identity theft and fraudulent refund claims.

As tax professionals, AG Tax recommends taxpayers to schedule an appointment with their tax return preparer as soon as the holiday season is over to avoid the last minute rush, and to ensure a complete and accurate tax return wherein the taxpayer has taken advantage of all the tax credits and deductions they qualify for.

AG TAX LLP CAN HELP

If you have any tax-related queries, need assistance with tax planning or filing your tax returns please contact us. Our team comprises of highly experienced tax professionals with extensive knowledge of US and Canadian tax laws as well as cross-border compliance.

Furthermore, as a full service accounting firm, AG Tax assures complete assistance with even your most complex tax needs.

We can assist with:

  • Canadian Personal and corporate tax returns
  • Cross Border Taxation and Business Planning
  • US Personal and Corporate Taxation
  • Disclosure of Foreign Assets and other information filings
  • Retirement planning
  • Estate Planning, Inheritance tax advice

To obtain a quote or to arrange for a consultation to discuss your tax related queries, please contact us at:

  • 416-238-5920 (Greater Toronto Area, ON)
  • 604-538-8735 (Greater Vancouver Area, BC)
  • 780-702-2732 (Greater Edmonton Area, AB)

 

Disclaimer: The information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.