Protecting Americans from Tax Hikes Act of 2015 (PATH Act, also known as the Extender Bill)
When Refunds will be Released for Taxpayers who Claim EITC and/or Additional Child Tax Credit
Everyone needs to be aware that a provision was included in the PATH Act mandating any refund related to a federal return claiming the Earned Income Tax Credit or the Additional Child Tax Credit may not be issued to the taxpayer until February 15 starting with the upcoming 2017 filing season.
This means that refunds for federal returns that are filed in January or early February and claim one of these credits will take longer for the taxpayer to receive than in previous years.
Additionally, since W-2s will be received by the IRS earlier than in previous years, the IRS will be matching the wage income reported on all EITC returns over the entire 2017 filing season.
Expansion of Preparer Due Diligence Requirements
The PATH Act expands the EITC due diligence requirements under Code Section 6695 (including the $500 penalty) to include the Child Tax Credit and the American Opportunity Education Credit beginning with 2016 individual federal tax returns.
As a result of the expansion of the due diligence requirements the Form 8867 will be modified as follows:
For more details on these changes see the draft of the 2016 Form 8867 on the IRS website.
Earned Income Tax Credit (EITC) Changes
The following changes were made that may affect individuals who claim EITC on their returns:
Changes for Child Tax Credit and the American Opportunity Education Credit
The following changes apply to returns that claim the Child Tax Credit or the American Opportunity credit:
Trade Preferences Extension Act of 2015 (HR 1295)
This trade bill included the following federal tax related provisions:
Child Tax Credit – Taxpayers who elect to exclude from gross income any amount of foreign earned income or foreign housing costs may not claim the refundable portion of the Child Tax Credit.
Penalty on Filing Information Returns Late – Maximum penalty is increased to $250 (from $100). If the failure is corrected within 30 days the penalty will now be $50 (was $30).
Education Credit and Tuition Fees Deduction – Beginning with Tax Year 2016, an individual must receive a Form 1098-T in order to claim an education credit (American Opportunity or Lifetime Learning) or the Tuition and Fees Deduction.
The Surface Transportation and Veterans Health Care Choice Improvements Act of 2015 (HR 3236)
This highway bill had the following provisions that will change the due dates for partnership and C Corporations beginning in 2017.
Return Due Dates for Business Returns
Tax Year 2016 Annual Changes and Reminders (For Returns Filed During 2017 Filing Season)
Standard Mileage Rates
Schedule A – Medical Expense Threshold Percentage (Reminder)
Deductible on Schedule A when the medical expenses exceed:
Beginning in 2017 the threshold will be 10% for all taxpayers.
Exemption Amount: $4,050 per exemption
Additional Amount for Aged and Blind:
Reminder to Watch for Phishing Email Schemes
March 22, 2017
IRS Identity Verification Letters
March 1, 2017
Additional Reminders for this Filing Season
February 16, 2017
Useful IRS Webpages
February 1, 2017
Reminder of the Federal Refund Delays and Expansion of Preparer Due Diligence Requirements
January 11, 2017
Expiring ITINs and Tax Scams Aimed at Tax Preparers
January 6, 2017
Affordable Care Act Reminders for Tax Year 2016 Returns
December 13, 2016
Federal Tax Law Changes that will Affect 2016 Federal Returns
December 7, 2016