Most people make New Year resolutions. But few put ?understanding the tax law changes? on their list of goals for the upcoming year.
While you don?t have to become a tax expert overnight to file your taxes successfully, you need to know the major changes and the important dates each year. Doing so will help you avoid overpaying when filing taxes. And, you?ll be prepared to get your refund as soon as possible. If you?re filing taxes this year, here?s a guide to what you need to know.
THE 2017 TAX FILING SEASON CALENDAR
If you?re motivated to file early, the federal tax filing season begins Jan. 23, 2017. The deadline is April 18.
Usually, the tax-filing season deadline is April 15. But you get a few extra days this year because April 15 falls on a Saturday. And the following Monday (April 17) is Emancipation Day, a legal holiday celebrated in Washington, D.C.
If you need more time to file your taxes this year, you can apply for an extension that will give you an extra six months to file your return. But, you still have to pay your taxes on time.
Another important date to remember: the deadline for IRA contributions. If you?ve put off contributing to your individual retirement account all year, you haven?t missed the boat. A special provision allows you to make your contribution as late as the tax-filing deadline for the year.
Usually, you have until April 15 of the following year to deposit your contribution. However, because the tax filing season for 2016 returns is pushed back three days, you have until April 18 to make your IRA contribution.
INCOME LIMIT INCREASES FOR FREE TAX HELP
More than 70 percent of taxpayers qualify for assistance filing their taxes, the IRS says. The IRS has made it a bit easier for taxpayers with slightly higher incomes to qualify for tax-filing help this year.
The limit to qualify for Free File Software, a free tax preparation software, has increased to $64,000 ? it was previously $62,000. If your income is above $64,000, you can still qualify for Free File Fillable Forms, which are similar to paper forms except that you can file your tax return online and send it electronically. Both options will not only save you money, but you?re more likely to receive your refund sooner as well.
If you don?t qualify for the IRS Free File Software, you?re not out of luck. You can take advantage of many other cheap and free tax filing software and services.
SOME REFUNDS MIGHT BE DELAYED IN 2017
Are you an early tax filer who files early because you want to get your tax refund sooner? If so, you might not like this news: You might have to wait a bit longer than usual to receive your refund.
Because of a new law, the IRS is required to hold on to refunds until at least Feb. 15 if you?re claiming the Earned Income Tax Credit or the Additional Child Tax Credit. So if you?re claiming those credits, your entire refund is delayed ? not just the portion attributable to the tax credits.
However, if you want to avoid being a victim of tax-refund fraud and identity theft, you might be grateful for this delay. By holding on to tax refunds a little while longer, the IRS will have more time to combat fraudulent refunds.
?These increased security screenings are invisible to most taxpayers,? Internal Revenue Commissioner John Koskinen said in a statement. ?But we want people to be aware we are taking additional steps to protect taxpayers from identity theft, and that sometimes means the real taxpayers face a slight delay in their refunds.?
And, the IRS says most refunds should still be issued less than 21 days after you file your tax return. You can check the status of your refund on the IRS website ?Where?s My Refund??
INCREASED PENALTY FOR NOT HAVING HEALTH INSURANCE
Under the Affordable Care Act, you?re required to have qualifying health insurance if you can afford it. If you didn?t have health insurance in 2016, the penalty you?ll pay when you file your federal tax return has gone up from the 2015 penalties.
In 2016 and 2017, the penalty is the larger of $695 per adult and $347.50 for each child under 18 capped at $2,085. Or, it could be 2.5 percent of your household income up to the national average price of a bronze plan sold through the marketplace. These penalties represent a significant increase from 2015 when it was the larger of 2 percent of your income or $325 per adult and $162.50 per child under 18, capped at $975.
If you need qualifying health insurance for the 2017 calendar year, the deadline for open enrollment in the Health Insurance Marketplace is Jan. 31.
INDIVIDUAL TAXPAYER IDENTIFICATION NUMBERS EXPIRING
Perhaps you don?t have a Social Security number. Instead, you might have an Individual Taxpayer Identification Number instead. If so, you need to know about this.
Any ITINs that have not been used in the previous three years ? or with middle digits of 78 or 79 ? have expired.. If you have an ITIN and you plan on filing a tax return this year, the IRS says you should renew it as soon as possible ? especially if you want to avoid refund delays.
According to the IRS, the renewal application can take as little as seven weeks but as many as 11 weeks during tax season. To get started on the renewal process, use the latest version of Form W-7, check ?Renew an existing ITIN? at the top of the form and fill out it out accordingly.